Exam 6: Cost of Goods Sold and Inventory

Which inventory cost flow method assigns the cost of the most recent items purchased to ending inventory?

Identify which inventory costing method achieves the effect listed in the following items. (Choices may be used more than once.) a.FIFO method c.Average cost method b.LIFO method d.Specific identification method -Prices are declining; ending inventory with this method falls between the amounts for the other two methods.

If the amount assigned to ending inventory is incorrect,

-Refer to the information provided for Klump Co. If the company uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is:

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 -A reduction in the amount of goods available for sale caused by defective merchandise.

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. If the company uses the LIFO inventory method, how much is inventory on the balance sheet at the end of January?

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. What effect does recording the purchase of merchandise on July 7, 2013 have on the buyer's accounting equation?

-Refer to the information provided for Paschal Exports. If the moving average cost method of inventory costing is used, determine the following amounts: A)Cost of goods sold for the units sold on July 10th? B)Ending inventory on July 31st?

"You Decide" Essay You are the Orlando store manager for Kruge Enterprises. When you came in this morning, you found the front door ajar. Once Security had arrived and you eventually got inside, you discovered that most of your inventory had been stolen. In order to file a claim with your insurance company you need to estimate the amount of inventory you had yesterday at closing time. Unfortunately, Kruge Enterprises uses a periodic inventory system. How can you estimate your lost inventory amount?

Under a perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

A LIFO liquidation occurs when a company sells more units than it buys during the period.

The following information is available for Porter Company for its fiscal year ending January 31, 2013: Compute the following financial ratios for Porter Company: A)Gross Profit Ratio B)Inventory Turnover Ratio C)Average Days to Sell Inventory

Refer to the information provided for Yu Company. For each of the items above, describe its economic effects on the company's accounting equation.

The excess of an inventory's value stated on a FIFO basis over its value stated on a LIFO basis is called a(n)____________________.

Serrano Company On September 1, 2013, Serrano Company purchased 70 units of Product A for $35,000 cash and also paid $1,500 transportation costs related to this purchase. On the same date, Serrano Company purchased 100 units of Product B for $10,000 on credit; however, the seller paid the $1,200 freight. The credit terms for Product B were 2/10, n/30. On September 3rd, Serrano Company determined that 5 units of Product A were defective, so they were returned to the seller. Serrano Company paid for its purchase of Product B on September 9th. On September 10th, Serrano Company purchased 90 units of Product C for $8,000 on credit with terms 1/10, n/30. The seller paid the freight. Serrano Company paid for its purchase of Product C on September 21st. -Refer to the information provided for Jocque Fabrics. If the LIFO method is used, determine the following amounts: A)Ending inventory on February 28th? B)Cost of Goods sold for the month of February? C)Gross Margin for February?

Under the periodic method, the information on sales can be combined within any period because all purchases are assumed to occur before any sales transactions.

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 did title to the merchandise transfer from the seller to the buyer?

Selected data from the financial statements for Tarpley & Underwood are presented below: -Refer to the information presented for Tarpley & Underwood. First, determine the dollar amount of cost of goods purchased. Then, prepare a cost of goods sold schedule using the cost of goods sold model illustrated in the text.

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 -Granted a customer a credit on its balance due for goods that were returned.

If ending inventory is understated, then cost of goods sold is understated.