Exam 6: Cost of Goods Sold and Inventory

Match the terms with the descriptions provided. a.Manufacturers d.Wholesalers b.Merchandisers e.Service companies c.Retailers -Companies that maintain three separate inventory accounts.

Refer to the information provided for Pham Enterprises. What is the company's gross profit ratio for 2013?

Which of the following types of inventory accounts would be used by a wholesaler or retailer?

Refer to the information provided for Yancey Company. How much would Yancey Company pay its supplier if it paid for one-half of the goods acquired within the discount period, and the other half after the expiration of the discount period?

Roe Company purchased merchandise on account from Rodriguez Company on December 12, 2013. On December 13, 2013, Roe Company returned damaged merchandise to Rodriguez Company and was granted an adjustment on its account. Roe Company uses the periodic inventory system. What effect does the merchandise return have on Roe Company's accounting equation?

-Refer to the information provided for Klinc Company. What is the cost of ending inventory at June 30th under the specific identification method?

Under the LIFO method of inventory costing, the units in the ending inventory represent the most recent purchase(s).

Match the terms with the descriptions provided. a.Average days to sell inventory d.Inventory turnover ratio b.Gross margin e.Freight-in c.Gross profit ratio f.Freight-out -Term referring to transportation costs paid by the seller.

-Refer to the information provided for Klinc Company. What is the cost of goods sold for June under the specific identification method?

-Refer to the information provided for Robey Company. If the company uses the FIFO method, determine the following amounts: A)Ending inventory on February 28th? B)Cost of Goods sold for the month of February?

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 -Freight costs incurred by the buyer to ship goods to its place of business.

Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?

During periods of declining purchase prices, LIFO produces the lowest amount of ending inventory relative to the other inventory costing methods.

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. Who is responsible for payment of the transportation costs on the merchandise sold?

Sales discounts decrease the cost of inventory acquired.

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 presented for White Appliances. Prepare all of the company's journal entries for August assuming the use of a perpetual inventory system.

-Refer to the information provided for Klump Co. If the company uses the (moving)Average Cost inventory costing method, cost of goods sold for the month of June is:

Under the periodic inventory system, a physical inventory must be taken to determine cost of goods sold.

Presented below is a partially-completed income statement for Waddy Corp. for 2013. Determine the missing amounts for each letter.

Explain the relationship between the valuation of inventory and income measurement as it related to the balance sheet and income statement.