Table 6-6 Sam's Wholesale Bikes $\begin{array} { | l | l | } \hline \text { January } 1 \text { inventory balance } & 15 \text { units at } \$ 350 \text { per unit } \\ \hline \text { January } 4 \text { purchase } & 50 \text { units at } \$ 375 \text { per unit } \\ \hline \text { January } 15 \text { sale } & 40 \text { units at } \$ 550 \text { per unit } \\ \hline \text { February } 8 \text { purchase } & 80 \text { units at } \$ 405 \text { per unit } \\ \hline \text { February } 15 \text { sale } & 70 \text { units at } \$ 550 \text { per unit } \\ \hline \end{array}$ -Refer to Table 6-6. What is the cost of goods sold for the two months assuming that Sam's uses the periodic weighted-average inventory method?

A) $42,787 B) $45,797 C) $38,992 D) $43,555 A) $42,787 B) $45,797 C) $38,992 D) $43,555

Table 6-1 Assume the following data for Burnette Merchandising for 2019: $\begin{array} { | l | l | } \hline\text { Beginning inventory } & 10 \text { units at } \$ 7 \text { each } \\ \hline \text { March } 18 \text { purchase } & 15 \text { units at } \$ 9 \text { each } \\ \hline \text { June } 10 \text { purchase } & 20 \text { units at } \$ 10 \text { each } \\ \hline \text { October } 30 \text { purchase } & 12 \text { units at } \$ 11 \text { each } \\ \hline \end{array}$ On December 31, a physical count reveals 15 units in ending inventory. -Refer to Table 6-1. Assume a periodic inventory system. Under the weighted-average method, cost of goods sold on the income statement would be:

A) $396. B) $294. C) $389. D) $420. A) $396. B) $294. C) $389. D) $420.

Given the following data: $\begin{array} { | l | r | } \hline\text { Ending inventory at cost } & \$ 62,000 \\ \hline \text { Ending inventory at net realizable value } & 61,000 \\ \hline \begin{array} { c } \text { Cost of goods sold (before consideration of the } \\ \text { lower-of-cost-and-net-realizable-value rule) } \end{array} & 104,000 \\ \hline \end{array}$ Which of the following depicts the proper account balance after the application of the lower-of-cost-and-net realizable value rule?

A) Cost of goods sold will be $105,000. B) Cost of goods sold will be $104,000. C) Cost of goods sold will be $61,000. D) Ending inventory will be $62,000. A) Cost of goods sold will be $105,000. B) Cost of goods sold will be $104,000. C) Cost of goods sold will be $61,000. D) Ending inventory will be $62,000.

Given the following data, what is cost of goods sold? $\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 950,000 \\ \hline \text { Beginning inventory } & 150,000 \\ \hline \text { Ending inventory } & 230,000 \\ \hline \text { Purchases } & 720,000 \\ \hline \end{array}$

A) $870,000 B) $640,000 C) $570,000 D) $510,000 A) $870,000 B) $640,000 C) $570,000 D) $510,000

Table 6-5 Assume the following data for Kruger Sales for November 2019: $\begin{array}{llcc} \text {Beginning inventory Nov. 1 } & 5 \text { units at } \$ 90 \text { each } \\ \text {Sale Nov. 3 } &3 \text { units at } \$ 120 \text { each } \\ \text {Nov. 6 purchase } &11 \text { units at } \$ 95 \text { each }\\ \text { Sale Nov. 8} &4 \text { units at } \$ 120 \text { each }\\ \text { Sale Nov. 9 } & 3 \text { units at } \$ 120 \text { each }\\ \end{array}$ On November 30, a physical count reveals 6 units on hand. -Refer to Table 6-5. Calculate gross margin for Kruger Sales assuming the perpetual moving-weighted-average-cost method is being used.

@#IMG-DLM& CPA Competency: 1.2.2 Evaluates treatme

Given the following data, what is the cost of ending inventory rounded to the nearest whole dollar using periodic FIFO? $\begin{array} { | l | l | } \hline \text { Sales revenue } & 100 \text { units at } \$ 10 \text { per unit } \\ \hline \text { Beginning inventory } & 50 \text { units at } \$ 8 \text { per unit } \\ \hline \text { Purchases } & 90 \text { units at } \$ 9 \text { per unit } \\ \hline \end{array}$

A) $400 B) $360 C) $890 D) $850 A) $400 B) $360 C) $890 D) $850

Exam 6: Accounting for Merchandise Inventory

Table 6-6 Sam's Wholesale Bikes January 1 inventory balance 15 units at \ 350 per unit January 4 purchase 50 units at \ 375 per unit January 15 sale 40 units at \ 550 per unit February 8 purchase 80 units at \ 405 per unit February 15 sale 70 units at \ 550 per unit -Refer to Table 6-6. What is the cost of goods sold for the two months assuming that Sam's uses the periodic weighted-average inventory method?

(Multiple Choice)

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Question 41

The journal entry to sell merchandise under a periodic inventory system includes a:

(Multiple Choice)

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Question 42

The adjusting entry at year end under a perpetual inventory system to record cost of goods sold includes a:

(Multiple Choice)

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Question 43

Two separate errors affected Satellite City in 2019. The beginning inventory was understated by $28,000 and the ending inventory was understated by $43,000. Net income in 2019 will be:

(Multiple Choice)

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Question 44

Table 6-1 Assume the following data for Burnette Merchandising for 2019: Beginning inventory 10 units at \ 7 each March 18 purchase 15 units at \ 9 each June 10 purchase 20 units at \ 10 each October 30 purchase 12 units at \ 11 each On December 31, a physical count reveals 15 units in ending inventory. -Refer to Table 6-1. Assume a periodic inventory system. Under the weighted-average method, cost of goods sold on the income statement would be:

(Multiple Choice)

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Question 45

Which of the following inventory costing methods requires a company to keep track of the actual physical movement of individual inventory items?

(Multiple Choice)

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Question 46

Piggly Wiggly Sales had six CD players in inventory on December 31. They were purchased in November for $170 each. A quoted price received from the supplier on December 31 shows the CD players now cost $175 each. Piggly Wiggly has marked each player to sell for $320. Using the lower-of-cost-and-net-realizable-value rule, the ending inventory of CD players should be shown at:

(Multiple Choice)

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Question 47

The following data are available for the month of April for Gore Company: $\text {April 1 inventory }$ $\quad 120$ $\text {units at \$ 8.15 each}$ $\text {April 10 purchase}$ $\quad 200$ $\text {units at \$ 8.20 each}$ $\text {April 20 purchase}$ $\quad 410$ $\text { units at \$ 8.40 each}$ $\text {April 25 purchase}$ $\quad 310$ $\text {units at \$ 8.50 each}$ Gore sold 630 units during April. Compute the value of ending inventory under FIFO. Assume a periodic inventory system.

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Question 48

When the sales value of the inventory subsequently increases after a write down to net-realizable-value the reported value may be increased to the limit of the original cost.

(True/False)

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Question 49

Given the following data: Ending inventory at cost \ 62,000 Ending inventory at net realizable value 61,000 Cost of goods sold (before consideration of the lower-of-cost-and-net-realizable-value rule) 104,000 Which of the following depicts the proper account balance after the application of the lower-of-cost-and-net realizable value rule?

(Multiple Choice)

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Question 50

The disclosure principle of accounting requires that a business reveal to the user of the financial statement the method used to value inventory.

(True/False)

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Question 51

If the cost of an item of inventory is $80 and the current selling price is $75, the amount shown in inventory on the balance sheet under the lower-of-cost-and-net realizable-value rule is:

(Multiple Choice)

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Question 52

All balance sheets have inventory listed as an asset.

(True/False)

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Question 53

The lower-of-cost-and-net-realizable-value rule is an application of the consistency principle.

(True/False)

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Question 54

Inventory at the end of the current year is overstated by $20,000. What effect will this error have on the following year's net income?

(Multiple Choice)

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Question 55

Given the following data, what is cost of goods sold? Sales revenue \ 950,000 Beginning inventory 150,000 Ending inventory 230,000 Purchases 720,000

(Multiple Choice)

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Question 56

FIFO costing is consistent with the physical movement of inventory for many companies.

(True/False)

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Question 57

Table 6-5 Assume the following data for Kruger Sales for November 2019: Beginning inventory Nov. 1 5 units at \ 90 each Sale Nov. 3 3 units at \ 120 each Nov. 6 purchase 11 units at \ 95 each Sale Nov. 8 4 units at \ 120 each Sale Nov. 9 3 units at \ 120 each On November 30, a physical count reveals 6 units on hand. -Refer to Table 6-5. Calculate gross margin for Kruger Sales assuming the perpetual moving-weighted-average-cost method is being used.

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Question 58

Given the following data, what is the cost of ending inventory rounded to the nearest whole dollar using periodic FIFO? Sales revenue 100 units at \ 10 per unit Beginning inventory 50 units at \ 8 per unit Purchases 90 units at \ 9 per unit

(Multiple Choice)

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Question 59

The lower-of-cost-and-net-realizable-value rule is a good example of conservatism in accounting.

(True/False)

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Question 60

The journal entry to sell merchandise under a periodic inventory system includes a:

The adjusting entry at year end under a perpetual inventory system to record cost of goods sold includes a:

Two separate errors affected Satellite City in 2019. The beginning inventory was understated by $28,000 and the ending inventory was understated by $43,000. Net income in 2019 will be:

Which of the following inventory costing methods requires a company to keep track of the actual physical movement of individual inventory items?

When the sales value of the inventory subsequently increases after a write down to net-realizable-value the reported value may be increased to the limit of the original cost.

The disclosure principle of accounting requires that a business reveal to the user of the financial statement the method used to value inventory.

If the cost of an item of inventory is $80 and the current selling price is $75, the amount shown in inventory on the balance sheet under the lower-of-cost-and-net realizable-value rule is:

All balance sheets have inventory listed as an asset.

The lower-of-cost-and-net-realizable-value rule is an application of the consistency principle.

Inventory at the end of the current year is overstated by $20,000. What effect will this error have on the following year's net income?

Given the following data, what is cost of goods sold? Sales revenue \ 950,000 Beginning inventory 150,000 Ending inventory 230,000 Purchases 720,000

FIFO costing is consistent with the physical movement of inventory for many companies.

Given the following data, what is the cost of ending inventory rounded to the nearest whole dollar using periodic FIFO? Sales revenue 100 units at \ 10 per unit Beginning inventory 50 units at \ 8 per unit Purchases 90 units at \ 9 per unit

The lower-of-cost-and-net-realizable-value rule is a good example of conservatism in accounting.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

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