Exam 6: Inventories

The following information was taken from the inventory records of Hope Corp.: What would be the ending inventory,assuming that the LIFO method is used in a periodic inventory system?

Give some examples of how a manufacturing company can manipulate earnings by including non-production costs in inventories.What does an auditor or financial statement user do to detect this type of manipulation?

What definition is used for "market" under IFRS and ASPE?

What journal entry is required when inventory is purchased under the periodic inventory system?

Identify whether the following are benefits of using a perpetual inventory system (in comparison to a periodic system).

Assume that ending inventory in fiscal 2016 is overstated by $1,000.What impact will this have on fiscal 2017 financial reporting?

Which statement best explains the retail inventory method?

Use the chart provided below to determine the impact of a company expensing $4,000 transportation costs related to the purchase of its inventory.At year end,the company had sold 50% of the affected inventory items.

Assume that a $1,000 purchase invoice received close to year-end is not recorded in fiscal 2016,but the inventory is appropriately included in the ending inventory count.What impact will this have on fiscal 2016 financial reporting?

Give some examples of how a merchandising company can manipulate earnings through its year-end inventories.What can an auditor do to detect this type of manipulation?

Why is a cost flow assumption used?

A fire destroyed the inventory of Mantis Company in June.Reconstructed data follows: What was the cost of the inventory lost in the fire?

Assume that a $400 purchase invoice received close to year-end is not recorded in fiscal 2016,but the inventory is appropriately included in the ending inventory count.What impact will this have on fiscal 2017 financial reporting?

What costs are not included in the cost of manufactured inventories?

Explain how fixed overhead costs should be accounted for if a plant is made idle due to a prolonged strike.

Use the following information: If the market price at year end is $210,000,what is the write down required?

Lean Ltd.had a balance of $52,300 in the office supplies account at the start of the year.During the year,purchases of $141,700 were made and debited to office supplies account.At the end of the year,a physical count of the office supplies indicated $41,800 on hand.What was the office supplies expense for the year?

For each of the following independent scenarios,indicate the effect of the error (if any)on: i.2016 net income; ii.2017 net income;and iii.2017 closing retained earnings. The company uses the periodic system of inventory and its fiscal year-end is December 31.Ignore income tax effects.Consider each of the following independent scenarios: a.Your analysis of inventory indicates that inventory at the end of 2016 was overstated by $27,000 due to an inventory count error.Inventory at the end of 20 13 was correctly stated. b.Invoices in the amount of $107,000 for inventory received in December 2016 were not entered on the books in 2016.They were recorded as purchases in January 2017 when they were paid.The goods were counted in the 2016 inventory count and included in ending inventory on the 2016 financial statements. c.Goods received on consignment amounting to $89,000 were included in the physical count of goods at the end of 2017 and included in ending inventory on the 2017 financial statements. d.For each of the three scenarios,provide the journal entry that should be recorded in 2017 to correct the error.

Compare the FIFO and LIFO methods of inventory valuation.Which method provides better quality information and why?

What inventory costing methods are permissible under GAAP? Explain the impact of these alternative methods on the income statement and the balance sheet.