Exam 6: Cost of Goods Sold and Inventory

Satoor, Inc. Satoor, Inc., which uses a periodic inventory system, purchased merchandise from Taye Company on July 7, 2013, for $15,000. The credit terms were 1/10, n/30. The goods were shipped FOB shipping point on July 7, 2013. Satoor, Inc. received the merchandise on July 10 and paid the amount due on July 15. -Refer to the information provided for Satoor, Inc. When the buyer records the payment on July 15th, its journal entry will include

The amount recognized on the balance sheet as the cost of inventory will ultimately be recognized as a(n)____________________.

Buyer Company purchased a large shipment of luggage from Seller Company on credit near the end of its accounting period. Seller Company shipped the luggage in January and Buyer Company received the luggage in February. Assume that Buyer Company's accounting period ends on January 31st, while Seller Company's accounting period ends on May 31st. Answer each independent question:

Selected account balances are listed below: -Refer to the information provided for Aaron Corporation. Calculate the Cost of Goods Sold.

Zellenger uses a periodic inventory system and had the following data for inventory during the most recent year: Calculate the company's ending inventory and cost of goods sold under the following inventory cost flow methods: A)FIFO B)LIFO C)Average Cost

For which type of merchandise would a company most likely use the specific identification method of inventory costing?

Tedder Co. Tedder uses a periodic inventory system. At the end of January, 20 units were on hand. The following additional information is available for the month of January: -Refer to the information provided for Tedder Co. Which of the following entries correctly records the purchase assuming the units were acquired on credit under terms of 2/10, n/30?

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) a.Add to inventory cost c.Not an inventory cost b.Subtract from inventory cost -Invoice price paid for resale goods.

Roesel Fashions completed a physical inventory at the end of 2013. A review of the physical inventory procedures and records uncovered several errors that are described below. In the columns provided, indicate the effect, if any, on the four financial statement items listed. Use the following codes for your answers: O = Overstatement; U = Understatement; NE = No Effect

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) a.Add to inventory cost c.Not an inventory cost b.Subtract from inventory cost -Returned goods to the seller.

Match the terms with the descriptions provided. a.Manufacturers d.Wholesalers b.Merchandisers e.Service companies c.Retailers -Companies such as advertising agencies and auto repair shops.

The following data is available for one of the products sold by Chancet Company, which uses a perpetual inventory system: Chancet Company's ending inventory for April was 25 units. Complete the table by determining the amounts of April 30th inventory, cost of goods sold, and gross margin under each of the inventory costing methods listed below. Ending Inventory Cost of Goods Sold Gross Margin A)FIFO B)LIFO C)Moving Average Cost

Match the terms with the descriptions provided. a.Consignment f.Purchase allowance b.Discount period g.Purchase discounts c.Inventory h.Purchase returns d.LIFO Reserve i.Purchases e.Lower of cost or market rule -Merchandise held for sale in the normal course of business.

-Refer to the information provided for Lowery Company. If the company uses the LIFO inventory costing method, how much is cost of goods sold for the month of March?

The difference between the FIFO, LIFO, and average cost methods is that each of these methods of inventory costing makes a specific assumption about the flow of costs.

Deeter Company, which sells auto parts, uses a perpetual inventory system. Identify the effects on the accounting equation. (Choices may be used more than once.) a.Increase in assets and liabilities b.Decrease in assets and liabilities c.Increase in assets and stockholders' equity d.Decrease in assets and stockholders' equity e.Increase in liabilities and decrease in stockholders' equity f.Decrease in liabilities and increase in stockholders' equity -Paid for merchandise outside of the discount period.

Match the terms with the descriptions provided. a.Manufacturers d.Wholesalers b.Merchandisers e.Service companies c.Retailers -General term for companies who sell goods to other companies as well as to the final consumer.

The following journal entry was included in the accounting records of Jumani Company: Feb. 11 Merchandise Inventory 7,000 Cost of Goods Sold 7,000 This entry is needed to record the:

Yancey Company The following information is available for Yancey Company, a retail store, for the year 2013. The company uses a periodic inventory system. Beginning inventory was $32,000. During the year, Yancey Company purchased goods totaling $634,000 on account with terms of 2/10, n/30, FOB shipping point. Yancey Company paid $1,000 in total freight charges directly to the freight company. At the end of the year, inventory on hand totaled $45,000. Net sales reported on the income statement for the year totaled $1,300,000. -Refer to the information provided for Yancey Company. How much is cost of goods sold assuming that Yancey Company takes advantage of one-half of the cash discount?

Match the terms with the descriptions related to merchandise sales and purchases. a.Transportation-in e.Cost of goods available for sale b.Perpetual inventory system f.Periodic inventory system c.Net purchases g.FOB shipping point d.FOB destination h.Delivery expense -The seller is responsible for the cost of delivering the merchandise to the buyer.