Table 6-2 $\begin{array} { | l | l | } \hline \text { Manuary } 1 \text { inventory balance } & 100 \text { units at } \$ 10 \text { per unit } \\ \hline \text { March } 2 \text { purchase } & 50 \text { units at } \$ 11 \text { per unit } \\ \hline \text { July } 8 \text { purchase } & 80 \text { units at } \$ 10 \text { per unit } \\ \hline \text { November } 15 \text { purchase } & 30 \text { units at } \$ 12 \text { per unit } \\ \hline \end{array}$ On December 31, a physical count reveals 80 units in ending inventory. -Referring to Table 6-2, assuming all goods are sold throughout the year for $17 per unit, gross margin calculated under the periodic FIFO method would be:

A) $1,210. B) $1,260. C) $1,150. D) $900. A) $1,210. B) $1,260. C) $1,150. D) $900.

Table 6-2 $\begin{array} { | l | l | } \hline \text { Manuary } 1 \text { inventory balance } & 100 \text { units at } \$ 10 \text { per unit } \\ \hline \text { March } 2 \text { purchase } & 50 \text { units at } \$ 11 \text { per unit } \\ \hline \text { July } 8 \text { purchase } & 80 \text { units at } \$ 10 \text { per unit } \\ \hline \text { November } 15 \text { purchase } & 30 \text { units at } \$ 12 \text { per unit } \\ \hline \end{array}$ On December 31, a physical count reveals 80 units in ending inventory. -Referring to Table 6-2, cost of goods sold calculated under the periodic FIFO method would be:

A) $1,800. B) $2,160. C) $1,910. D) $1,850. A) $1,800. B) $2,160. C) $1,910. D) $1,850.

For the current year, Heedy's Department Store reported the following data: $\begin{array} { | l | r | } \hline \text { Goods available for sale } & \$ 1,074,450 \\ \hline \text { December } 31 , \text { inventory balance } & 85,430 \\ \hline \end{array}$ The current net realizable value of the inventory on the balance sheet date is $91,730. Using the lower-of-cost-and-net-realizable-value rule, what is cost of goods sold for Heedy's Department Store?

A) $989,020 B) $982,720 C) $897,290 D) $1,080,750 A) $989,020 B) $982,720 C) $897,290 D) $1,080,750

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 gross margin for the two months assuming that Sam's uses the periodic inventory weighted-average inventory method?

A) $14,703 B) $16,945 C) $17,713 D) $21,508 A) $14,703 B) $16,945 C) $17,713 D) $21,508

Exam 6: Accounting for Merchandise Inventory

Table 6-2 Manuary 1 inventory balance 100 units at \ 10 per unit March 2 purchase 50 units at \ 11 per unit July 8 purchase 80 units at \ 10 per unit November 15 purchase 30 units at \ 12 per unit On December 31, a physical count reveals 80 units in ending inventory. -Referring to Table 6-2, assuming all goods are sold throughout the year for $17 per unit, gross margin calculated under the periodic FIFO method would be:

(Multiple Choice)

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Question 81

When prices are falling, the cost of goods sold reported on the income statement on a weighted-average basis is generally:

(Multiple Choice)

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Question 82

Which of the following is not an acceptable inventory cost method?

(Multiple Choice)

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Question 83

Table 6-2 Manuary 1 inventory balance 100 units at \ 10 per unit March 2 purchase 50 units at \ 11 per unit July 8 purchase 80 units at \ 10 per unit November 15 purchase 30 units at \ 12 per unit On December 31, a physical count reveals 80 units in ending inventory. -Referring to Table 6-2, cost of goods sold calculated under the periodic FIFO method would be:

(Multiple Choice)

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Question 84

For the current year, Heedy's Department Store reported the following data: Goods available for sale \ 1,074,450 December 31, inventory balance 85,430 The current net realizable value of the inventory on the balance sheet date is $91,730. Using the lower-of-cost-and-net-realizable-value rule, what is cost of goods sold for Heedy's Department Store?

(Multiple Choice)

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Question 85

The specific-unit-cost method is useful for inventory items that have a distinctive identity.

(True/False)

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Question 86

The moving-weighted-average-cost method generates a gross margin that will be lower than the gross margin generated under FIFO costing when prices are rising.

(True/False)

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Question 87

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 the weighted-average method. Assume a periodic inventory system.(round per unit cost to the nearest cent, round final answer to the nearest dollar)

(Essay)

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Question 88

The cost of goods available for sale is equal to the:

(Multiple Choice)

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Question 89

Understating beginning inventory in 2018 will overstate net income for 2019.

(True/False)

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Question 90

The materiality concept of accounting allows a business to expense the cost of freight-in rather than add it to the cost of the inventory on the basis that the difference in the accounting treatment would not sway a decision by a financial statement user.

(True/False)

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Question 91

Ending inventory for Commodity X consists of 20 units. Under the FIFO method, the cost of the 20 units is $5 each. Current net realizable value is $4.75 per unit. Using the lower-of-cost-and-net -realizable-value rule to value inventory, the balance sheet would show ending inventory of:

(Multiple Choice)

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Question 92

Under either the periodic or the perpetual system, ending inventory will be the same when FIFO inventory costing method is used.

(True/False)

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Question 93

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 gross margin for the two months assuming that Sam's uses the periodic inventory weighted-average inventory method?

(Multiple Choice)

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Question 94

Engle Enterprises reports net sales revenue for 2019 to be $595,000, January 1, 2019 inventory at $102,000, net purchases at $370,000, and operating expenses at $155,000. Under FIFO, December 31, 2019, inventory would be valued at $96,700. Compute net income for 2019.

(Essay)

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Question 95

Jan-Con Company provides the following information for the month of August. Date Units \/ Unit Total Aug 1 Opening inventory 40 \ 30 \ 1,200 Aug 3 Purchase 60 \ 35 \ 2,100 Aug 10 Sale 100 \ 60 \ 6,000 Aug 22 Purchase 90 \ 40 \ 3,600 Aug 24 Sale 70 \ 70 \ 4,900 Required: (a)What is the value of the ending inventory assuming the company uses a periodic inventory system and the weighted-average method? (b)What is the cost of goods sold if the company uses a perpetual inventory system and the FIFO method of valuing inventory? (c)What is the cost of goods sold if the company uses a perpetual inventory system and the weighted average method of valuing inventory?

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Question 96

A perpetual inventory system:

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Question 97

Two separate errors affected Rollings Company in 2018. The beginning inventory was overstated by $12,000 and the ending inventory was overstated by $18,000. Net income in 2019 will be:

(Multiple Choice)

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Question 98

When prices are rising, the ending inventory balance reported on a weighted-average basis is generally:

(Multiple Choice)

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Question 99

If ending inventory for the current accounting period is understated by $4,700:

(Multiple Choice)

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Question 100

When prices are falling, the cost of goods sold reported on the income statement on a weighted-average basis is generally:

Which of the following is not an acceptable inventory cost method?

The specific-unit-cost method is useful for inventory items that have a distinctive identity.

The moving-weighted-average-cost method generates a gross margin that will be lower than the gross margin generated under FIFO costing when prices are rising.

The cost of goods available for sale is equal to the:

Understating beginning inventory in 2018 will overstate net income for 2019.

The materiality concept of accounting allows a business to expense the cost of freight-in rather than add it to the cost of the inventory on the basis that the difference in the accounting treatment would not sway a decision by a financial statement user.

Ending inventory for Commodity X consists of 20 units. Under the FIFO method, the cost of the 20 units is $5 each. Current net realizable value is $4.75 per unit. Using the lower-of-cost-and-net -realizable-value rule to value inventory, the balance sheet would show ending inventory of:

Under either the periodic or the perpetual system, ending inventory will be the same when FIFO inventory costing method is used.

Engle Enterprises reports net sales revenue for 2019 to be $595,000, January 1, 2019 inventory at $102,000, net purchases at $370,000, and operating expenses at $155,000. Under FIFO, December 31, 2019, inventory would be valued at $96,700. Compute net income for 2019.

A perpetual inventory system:

Two separate errors affected Rollings Company in 2018. The beginning inventory was overstated by $12,000 and the ending inventory was overstated by $18,000. Net income in 2019 will be:

When prices are rising, the ending inventory balance reported on a weighted-average basis is generally:

If ending inventory for the current accounting period is understated by $4,700:

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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