Exam 6: Inventories

Explain the meaning of net realizable value and when raw materials,work in progress and finished goods inventories need to be written down.

Explain what happens if the value of inventory recovers after it has been written down.How often will such an adjustment actually be made to inventory?

Using the following information,what amount of "shrinkage" would be identified under the periodic inventory system?

What is the difference between the gross margin and the retail method for estimating ending inventory?

Crossway Outfitters is a retailer of outdoor clothing and equipment.The company has a standard mark-up of 60% on invoiced cost.Inventory at the beginning of the year was $1,840,000.During the year,the company purchased $14,300,000 of goods and recorded sales of $24,000,000.The year-end inventory count showed $2,590,000 in inventory measured at actual retail prices.Included in this total of $2,590,000 is $390,000 of goods that had been discounted by 25% relative to regular prices. Required: Using the retail inventory method,estimate the cost of inventory at the year-end and the amount of cost of goods sold.

Which statement is not correct about the periodic inventory system for inventory management?

Which statement is not correct about inventory errors?

Which statement is correct about using a cost flow assumption?

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

Use the chart provided below to determine the impact if a company forgets to include $3,500 of inventory that was shipped FOB shipping point on December 15,2017 but was still in transit at year end.The purchase invoice was received before year end and appropriately included in the purchases and accounts payable.

Explain why the absorption costing method is appropriate under GAAP.

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2016,but the inventory was excluded in error during the ending inventory count.What impact will this have on fiscal 2017 financial reporting?

Which statement is not correct about the retail inventory method?

Outdoor Devices Inc.manufactures sport hunting equipment.The company's operations had the following results for 2016.Actual production volume approximated normal levels.F = favourable variance,meaning actual costs were below standard;U = unfavourable variance,meaning actual costs exceeded standard.Assume all variances are considered to be material. Required: a.Determine the amount that Outdoor should include in the cost of inventories produced in the year. b.If actual production volume were higher than normal,what would be the effect on the cost of inventories on a per unit basis? What if actual production volume were lower than normal?

Consider the following inventory information: Using the first-in,first-out (FIFO)method and the periodic inventory system,calculate the cost of goods sold in January and the cost of inventory on January 31.

For the year ended December 31,2016,Complex Company reported gross margin of $29,700,which was 30% of the sales for the period.The cost of goods available for sale was 120% of the cost of goods sold.The beginning inventory was twice as much as the ending inventory.What was the amount of purchases for 2016?

Which statement is correct?

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

A specialized retailer has a selection of five products.The following is information relating to these products. The company estimates selling costs to be 4% of selling price,primarily for sales commissions. Required: Determine the amount of inventory write-down per product required,if any.

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2016,but the inventory was excluded in error during the ending inventory count.What impact will this have on fiscal 2016 financial reporting?