Exam 6: Merchandising Inventory

A company uses perpetual inventory in connection with the specific-identification method.The company purchased 30 industrial diamonds for $500 per unit.Later in the month,they purchased another 20 diamonds from another supplier for $480 per unit.On the last day of the month,they sold 18 diamonds to a customer at a price of $800 per unit.Of the 18 diamonds,3 came from the first batch and the remainder came from the second batch. -Which of the following journal entries correctly records the Cost of goods sold?

Given the same purchase and sales data,the three major costing methods will result in three different amounts for Gross profit.

A company that uses the perpetual inventory system sold $1,000 of goods to a customer on account.Which of the following journal entries correctly records the Sales revenue?

Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?

The consistency principle states that businesses should use the same accounting methods from period to period.

When using periodic inventory,the closing process begins with closing out the Beginning inventory to Cost of goods sold.The second step is to set up the ending inventory by debiting Cost of goods sold and crediting Inventory.

Owens Janitor Supply has the following account balances at the end of the current accounting period. Beginning inventory \ 50,000 Net purchases 400,000 Net sales revenue 500,000 A normal gross profit percent is 40%.What is the Estimated ending inventory as determined by the gross profit method?

Under which of the following inventory costing methods is ending inventory based on the cost of the oldest purchases?

Martin Sales had a Beginning inventory balance of $120 made up of 10 units purchased for $12.00 per unit.Early in the month,they purchased 16 units at $10.00 per unit.Later that month,they sold 15 units.Martin uses a perpetual inventory system,and applies LIFO. -How much is the Ending inventory balance?

Berring Sales uses LIFO.The partially completed inventory record for January appears below. On January 14,the company sold 10 units.On January 29,the company sold 50 units. -Complete the inventory record through the January 14 sale,and calculate the Inventory balance after the January 14 sale.(Please round to the nearest whole dollar.)

Given the same purchase and sales data,the three major costing methods will result in three different amounts for Sales revenue.

Berring Sales uses FIFO.The partially completed inventory record for January appears below. On January 14,the company sold 10 units.On January 29,the company sold 50 units. -Complete the inventory record and calculate the Cost of goods sold for the month of January.(Please round to the nearest whole dollar.)

Twenty units of inventory on hand at the end of the year are recorded at their cost of $5.00 per unit using FIFO.Current replacement cost is $4.50 per unit.What amount would be reported as inventory on the balance sheet?

Estimated ending inventory can be computed by subtracting Estimated cost of goods sold from Cost of goods available for sale.

Martin Sales had a Beginning inventory balance of $120 made up of 10 units purchased for $12.00 per unit.Early in the month,they purchased 16 units at $10.00 per unit.Later that month,they sold 15 units.Martin uses a perpetual inventory system,and applies FIFO. -How much is the Cost of goods sold for the month?

The lower-of-cost-or-market rule demonstrates accounting conservatism in action.

Which of the following are clues that a company may have been "cooking the books" by fraudulently increasing their level of net sales?

Revenue is $400,000 and Cost of goods sold is $320,000.How much is the gross profit percent?

Under periodic inventory,the company first calculates Cost of goods sold for the period,and then determines what the Ending inventory balance is.

Ending inventory equals the number of units on hand multiplied by the unit cost.