Exam 5: Inventories and Cost of Goods Sold

Under the __________ method,the amount of cash paid to suppliers of inventory is shown as a deduction in the Operating Activities category of the cash flow statement.

Takenson Corp. Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Sales \ 500,000 Purchases 225,000 Inventory (beginning) 16,000 Inventory (ending) 30,000 Operating expenses 148,000 Income tax expense 10,000 Retained earnings (beginning) 53,000 Dividends 15,000 -Refer to the information for Takenson Corp. Calculate net income.

Based upon the following data,determine the cost of goods sold for April. Inventory, April 1 85,560 Inventory, April 30 96,330 Purchases 373,880 Purchases returns and allowances 14,760 Purchases discounts 10,900 Transportation In 4,135

Describe how the inventories of manufacturers differ from the inventories of retailers.

Cooking Corner Cooking Corner reported inventory on its balance sheet at December 31, 2016 at $32,000. During 2017, Cooking Corner purchased goods totaling $634,000 on account with terms of 2/10, n/30, FOB shipping point. Total charges paid by Cooking Corner directly to the freight company were $1,000. At the end of 2017, inventory on hand totaled to $45,000. Net sales for 2017 totaled $1,300,000. Cooking Corner employs a periodic inventory system. -Refer to the information for Grappa,Inc. How much of every dollar is gross profit for 2018?

When inventories are written down due to the application of the lower-of-cost-or-market (LCM)rule,the account that is usually increased is

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules? Inventory Method Inventory Method for Tax Reporting for Financial Reporting a. LIFO LIFO b. LIFO FIFO c. Weighted average FIFO d. FIFO LIFO

Floors,Inc.offers terms of 2/10,n/30 to credit customers.Tile Magic Corp.purchased 100 tile cutters with a list price of $20 each on August 5,2017,on account.Tile Magic Corp.paid the invoice on August 31,2017.How much sales discount will Floors recognize?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method,then the amount owed to suppliers during the period had decreased.

The lower-of-cost-or-market (LCM)rule violates the historical cost principle.

In the following information is taken from the 2017 annual reports of Focal Point Industries.(All figures have been rounded to millions of dollars. ) Balance Sheet Data May 31, 2017 May 31, 2016 Raw materials \ 25.8 \ 52.1 Work in process 44.8 34.7 Finished goods Inventories at FIFO 1,203.3 1,390.6 Adjustment to LIFO 5.6 21.9 $\text { Cash Flow Data (Operating Activities) }$ Net income \ 451.4 \3 99.9 Additions to net income: Depreciation 198.2 100.2 Amortization 30.6 49.0 Changes in assets and liabilities: Inventories 197.3 (58.0) Accounts payable and other (170.4) (70.1) Required (1)Describe what costs are included in each of the three types of inventories listed above for Focal Point Industries. (2)Even though the footnote describing the inventory costing method(s)used by Focal Point Industries is not provided above,what can you conclude about the inventory costing method(s)used by the company?

Anthony's Shoe Company uses a perpetual inventory system.The beginning balance in its Inventory account is $1,500,and the ending balance is $1,000.Cost of goods sold is $6,500.What was the amount of inventory purchased during the year?

Park,Inc.purchased merchandise from Jay Zee Music Company on June 5,2017.The goods were shipped the same day.The merchandise's selling price was $15,000.The credit terms were 1/10,n/30.The shipping terms were FOB shipping point.Park received the merchandise on June 10,2017.Park paid the amount due on June 13,2017. - If Park uses the periodic inventory system,the effect of recording the payment on June 13,2017,will include a(n)

Which of the following statements regarding the gross profit ratio is not true?

Which of the following statements is not true?

Summer,Inc.has been in business for 20 years.During that time,the company has consistently used the LIFO inventory costing method.Because of inflation,prices for merchandise have increased consistently over the 20 years.The company has maintained the same inventory quantities over the 20-year period.Which of the following statements is true?

Goldman Inc. The following is from Goldman Inc.'s 2017 income statement. Purchases \ 172,000 Transportation-in 11,000 Inventory, January 1, 2017 26,500 Inventory, December 31, 2017 28,800 Purchase returns and allowances 8,400 - How much will Goldman report as its cost of goods sold in its 2016 income statement?

Roki Inc.uses the periodic inventory system and has the following data for the month of June: June 1 On hand, 50 units @\ 15.00 each 750.00 5 Purchased 115 units \ 15.10 each 1,736.50 14 Purchased 75 units @\ 15.20 each 1,140.00 Total cost of goods avalable for sale \ 3,626.50 30 On hand, 90 units -If Roki uses the weighted average cost method,the amount assigned to the June 30 inventory would be

Texas Inc.sold merchandise to Fagin Corp.on December 28,2017,with shipping terms of FOB destination point.Fagin Corp.received the merchandise on January 3,2018.Which of the following statements is true?