Exam 6: Merchandise Inventory

A company purchased 200 units for $40 each on January 31.It purchased 200 units for $30 each on February 28.It sold a total of 250 units for $100 each from March 1 through December 31.If the company uses the last-in,first-out inventory costing method,calculate the cost of ending inventory on December 31.(Assume that the company uses a perpetual inventory system.)

James Sales sold 450 units of product to a customer on account.The company uses the perpetual inventory system and the FIFO inventory costing method.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $12 per unit.Prepare the journal entries to record the sale.Omit explanations.

Which of the following is an application of conservatism?

Landers Company has 9 units in inventory on December 31.The units were purchased in November for $180 each.The price lists from suppliers indicate the current replacement cost of the item to be $178 each.What is the effect on gross profit if Landers values its ending merchandise inventory using the lower-of-cost-or-market rule?

Everyday Wear Retail had the following balances and transactions during 2018: Beginning Inventory 15 units at \ 71 Tune 10 Purchased 30 units at \8 5 December 30 Sold 20 units December 31 Replacement cost \6 6 The company maintains its records of inventory on a perpetual basis using the first-in,first-out inventory costing method.Calculate the amount of ending Merchandise Inventory on December 31,2018 using the lower-of-cost-or-market rule.

Centennial Company sold 600 units of inventory at $20 per unit on account.The company uses the perpetual inventory system and the last-in,first-out (LIFO)inventory costing system.The beginning inventory included 200 units at $9 per unit.The most recent purchases include 700 units at $12 per unit.The sale occurred after the last purchase. a.Prepare the journal entries to record the sale.Omit explanations. b.Compute the cost of the ending inventory.Label your work.

Eagle Auto Supplies reported the following income statement for the year ended December 31,2018. Smithson Electrical Fixtures Income Statement Year Ended December 31, 2018 Sales Revenue \ 426,500 Cost of Goods Sold Beginning Merchandise Inventory \ 36,000 Net Cost of Purchases Cost of Goods Available for Sale 309,800 Less: Ending Mercha Inventory 41,400 Cost of Goods Sold: 268,400 Gross Profit 158,100 Operating Expenses 122,600 Net Income \3 5,500 Compute inventory turnover rate for the year.(Round to two decimal places.) Compute days' sales in inventory for the year.(Round to two decimal places.)

Which of the following inventory costing methods results in the highest value of ending inventory during a period of rising inventory costs?

Which of the following inventory costing methods yields the highest net income during a period of rising inventory costs?

When using the LIFO inventory costing method,ending merchandise inventory will be the lowest,as compared to FIFO and weighted-average inventory costing methods,when costs are increasing.

Complete the following table,which compares the effects of LIFO,FIFO,and weighted-average inventory costing methods on the financial statements in periods of rising inventory costs.The answer should be lowest,highest,or middle. Financial Statement Element: LFF FFF Weighted- Average Cost of Goods Sold Net Income Ending Merchandise Inventory

Which of the following states that the business should use the same accounting methods from period to period?

Which of the following inventory costing methods requires the calculation of a new average cost after each purchase?

The ending inventory of a company was $450,000 as per the perpetual inventory records.The current replacement cost for the ending inventory is $410,000.Prepare the journal entry to adjust inventory.Omit explanation.

What does inventory turnover measure? What does a low rate of inventory turnover indicate?

During a period of declining inventory costs,which of the following inventory costing methods should be used by a company that intends to minimize its income tax expenses?

Using the FIFO method of inventory valuation will always produce the same results for cost of goods sold and ending inventory whether a company uses perpetual or periodic inventory costing methods.

Which of the following inventory costing methods results in the lowest value of ending inventory during a period of rising inventory costs?

Inventory turnover is computed by dividing average merchandise inventory by cost of goods sold.

A company uses the weighted-average method of inventory valuation under a periodic inventory system.The company began the year with a zero inventory balance.They had the following transactions during the year. 1.Purchased 65 units at $6 per unit 2)Purchased 130 units at $6 per unit 3)Sold 110 units at $12 per unit 4)Purchased 60 units at $7 per unit 5)Sold 110 units at $13.25 per unit At the end of the year,the company counted the inventory and found 35 units remaining.Calculate the cost of goods sold for the year.(Round the unit costs to two decimal places and total costs to the nearest dollar.)