Exam 5: The Purchase and Sale of Inventory

Jennifer works the front counter at Burger King.Often her friends drop by when she's working and she gives them free food (inventory)without ringing up any sales.She figures it's OK as long as she isn't caught. 1.Assume that Burger King uses a perpetual inventory system.Describe how a perpetual inventory system helps to identify inventory shrinkage. 2.Is it ethical to give your friends free food as long as you aren't caught?

Which of the following 2011 financial statement line items will be affected if the 2011 ending inventory balance is overstated?

McDonald's gross profit ratio is higher than The Boeing Company.

Minoan Company lost its entire inventory during an earthquake.The following key inventory information was recovered from backup data stored electronically at a remote location: Use the gross profit method to estimate the cost of the ending inventory.

Assume that Tango Company had a beginning inventory of 100 units at a cost of $2.00 per unit.Current period purchases were 400 units at a cost of $4.00 per unit.The weighted average cost of each unit is $3.

Inventory information for Great Falls Merchandising,Inc.is provided below.Sales for the period were 2,800 units at $8 each.The company uses a FIFO periodic inventory system. Determine the gross profit for the quarter ended March 31.

Idaho Company made the following purchases during the month of October. Required: 1.Complete the chart below for each of the four purchases. 2.Assuming that the selling company accepts all discounts,what is the total cost of purchases for the month?

Fargo Engines Incorporated sells part number 45G to toy manufacturers around the world.Information about part number 45G is contained in the table below.Fargo uses a weighted-average periodic inventory system. Determine the cost of goods sold and ending inventory cost of part 45G if 2,000 units remain unsold in inventory at the end of the accounting period.

The accountant for Rock Springs,Inc.needs to estimate the ending inventory balance so that she can prepare quarterly financial statements.The accountant has gathered the following information: Use the gross profit method to estimate the cost of the ending inventory.

Philipsburg Corporation sells hats to upscale retailers around the world.Information about inventory is contained in the table below.The company uses a LIFO perpetual inventory system. Determine the gross profit for the period assuming that the only sale was 1,200 units for $35 each on January 15.

Putting on the Ritz,Inc.sells hats to upscale retailers around the world.Information about inventory is contained in the table below.The company uses a LIFO perpetual inventory system. Determine the gross profit for the period assuming that the only sale was 1,200 units for $35 each on January 15.

Vango,Inc.sells part number 86Z to auto parts stores around the world.Information about part number 86Z is contained in the table below.Vango uses a LIFO periodic inventory system. Determine the cost of goods sold and ending inventory value of part 86Z,if 4,000 units remain unsold in inventory at the end of the accounting period.

Which of the following costs are included in the inventory account when inventory is purchased FOB shipping point?

On December 29,Perch X,Inc.purchased $2,000 of merchandise from a supplier.The shipping terms were FOB destination.The merchandise did not arrive until after yearend.Perch X should ______.

Indicate the financial statement where each item listed below would be found. BS = the balance sheet IS = the income statement CF = the statement of cash flows F = the notes to the financial statements N = The item is NOT part of GAAP-based accounting disclosure. ______ 1.cash collected from customers ______ 2.cash paid to suppliers ______ 3.the fair market value of inventory,which includes the desired profit margin ______ 4.the cost flow method adopted for inventory valuation ______ 5.inventory ______ 6.cost of goods sold ______ 7.sales

Which method results in the cost of goods sold equaling the exact cost of the actual goods that have been sold?

A vendor offers terms of 2/10,n/30.What is the ANNUAL interest rate the vendor is charging a buyer who does not pay within 10 days? (Assume there are 360 days in the year.

On December 12,Occident,Ltd.,a company in Singapore,ordered merchandise from San Francisco Exports.The merchandise was shipped to Occident on December 29,FOB shipping point.The merchandise arrived at Occident's warehouse on February 1.Occident paid for the merchandise on March 2.When should San Francisco Exports recognize revenue?

Lito & Sons Woodworks has a beginning inventory of $60,000 and ending inventory of $84,000 for the current period.The company had sales of $340,000 and cost of goods sold of $200,000 during the period.What was the inventory turnover?