Exam 9: Inventory and Cost of Goods Sold

On August 1,Patron Company recorded purchases of inventory of $80,000 and $100,000 under credit terms of 2/15,net 30.The payment due on the $80,000 purchase was remitted on August 14.The payment due on the $100,000 purchase was remitted on August 29.Under the net method and the gross method,these purchases should be included at what respective net amounts in the determination of cost of goods available for sale?

A company records inventory at the gross invoice price.Theoretically,how should the following affect the costs in inventory?

The Kidde Corporation uses the lower-of-cost-or-market method to value inventory. Data regarding the items in work-in-process inventory are presented below. -See information regarding the Kidde Corporation above.The inventory valuation for highlighters using the lower-of-cost-or-market method is

The term LIFO reserve refers to

Tenure Company's accounting records indicated the following information: A physical inventory taken on December 31,2014,revealed actual ending inventory at cost was $1,150,000.Tenure's gross profit on sales has regularly been about 25 percent in recent years.The company believes some inventory may have been stolen during the year.What is the estimated amount of missing inventory at December 31,2014?

Alana's Clothing Store sells jeans. During January 2014, its inventory records for one brand of designer jeans were as follows: -See information for Alana's Clothing Store above.Using this information,periodic FIFO cost of goods sold is

Purchases and sales during a recent period for Lantern, Inc. were: Beginning inventory was 100 units at $1 each. -See information for Lantern,Inc.above.Given this information,what is the cost per unit available for sale during the year when using the average cost method (rounded to the nearest cent)?

When the current year's ending inventory amount is overstated,the

Which of the following would NOT be included in the cost of work in process inventory?

Kendall Company reported the following net income amounts: In 2017,the company discovered errors that had been made in computing the ending inventories for 2014 and 2015,as follows: Compute the correct net incomes for (1)2014,(2)2015,and (3)2016.

The average cost method is applicable to which of the following inventory systems?

With LIFO,cost of goods sold is $195,000,and ending inventory is $45,000.If FIFO ending inventory is $65,000,how much is FIFO cost of goods sold?

The gross profit method of inventory valuation is NOT valid when

Which of the following statements is true?

The following information appears in Molsone Company's records for the year ended December 31: On December 31,a physical inventory revealed that the ending inventory was only $210,000.Molsones gross profit on net sales has remained constant at 30 percent in recent years.Molsone suspects that some inventory may have been pilfered by one of the company's employees.At December 31,what is the estimated cost of missing inventory?

Montana Company is a wholesale electronics distributor.On December 31,2014,it prepared the following partial income statement: Given this information,if Montana Company's gross margin is 30 percent of net sales,what is the correct ending inventory balance?

A company sells four products: I, II, III, and IV. The company values all inventories using the lower-of-cost-or-market procedure. The company has consistently experienced a profit margin of 20 percent of sales and expects this rate to hold for the future. Additional information, shown below, is available for the most recent year as of December 31. -See information regarding the four products above.Using the lower-of-cost-or-market procedure,what is the reported inventory value at December 31 for one unit of Product II?

At the close of its fiscal year on March 31,2014,Villager Industries,Inc.was in the process of relocating its plant.This resulted in some confusion relating to the inventory cutoff,as indicated by the following: (1)Merchandise on hand costing $1,794 was included in the inventory although the purchase invoice was not recorded until April 12,2014. (2)Merchandise shipped on April 1,2014,was included in inventory--the cost of this merchandise was $2,219,and the sale was recorded as $3,138 on March 31,2014. (3)Merchandise costing $12,150 was included in the inventory although it was shipped to a customer on March 31,2014,FOB shipping point; the company recorded the sale of $19,246 on that date. (4)Merchandise costing $1,820 was not counted. (5)Merchandise in transit (shipped to the company FOB destination)was recorded as a purchase as of April 2,2014,and its cost of $17,287 was not included in the March 31,2014,inventory. Assuming that the company does not maintain a perpetual inventory system and that the books for the fiscal year have been closed,provide the necessary correcting entries.(Ignore income taxes.)

Which of the following will result if the current year's ending inventory amount is understated in the cost of goods sold calculation?

What is the maximum amount at which inventory can be valued when the goods have experienced a permanent decline in value?