Exam 6: Inventories

If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole. Item Inventory Quantity Unit Cost Price Unit Market Price Product C 420 \ 6 \ 5 Product D 370 12 14

While taking a physical inventory, a company counts their inventory as less than the actual amount on hand. How will this error affect the income statement?

In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

The inventory method that assigns the most recent costs to cost of goods sold is

If Beginning Inventory (BI) + Purchases (P) - Ending Inventory (EI) = Cost of Goods Sold (COGS), an equivalent equation can be written as?

The three identical units of Product Basic H are purchased during July, as shown below. Date Product Basic H Cost July 3 Purchase 1 \ 35 July 10 Purchase 1 \ 36 July 24 Purchase 1 \ 37 Total 3 \ 108 Average cost per unit \ 36 Assume one unit sells on July 28 for $45. Determine the gross profit, cost of merchandise sold, and ending inventory on July 31 using (a) first in first out, (b) last in last out, (c) average cost flow methods.

If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

The following lots of a particular commodity were available for sale during the year: Beginning inventory 10 units at \ 60 First purchase 25 units at \ 65 Second purchase 30 units at \ 68 Third purchase 15 units at \ 75 The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year using the average cost method?

List three different security measures taken by stores to safeguard inventory.

For the year ended December 31, 2014 Depot Max's cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max's inventory turnover for the year.

One of the two internal control procedures over inventory is to properly report inventory on the financial statements.

A physical inventory should be taken at the end of every month.

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory.

On the basis of the following data for Barker Industries as of December 31, 2011, determine the value of the inventory at the lower of cost or market. Also, show how the merchandise inventory would appear on the balance sheet (assume that the cost was determined by the FIFO method). Apply lower of cost or market to each inventory item. Commodity Inventory Quantity Unit Cost Price Unit Market Price Size 4 9 \ 7 \ 19 Size 5 10 17 14 Size 6 14 23 20 Size 7 12 13 15

A perpetual inventory system is an effective means of control over inventory.

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work.

All of the following are reasons to use an estimated method of costing inventory except:

Determine the total value of the merchandise using Net Realizable Value: Item Quantity Selling Price Commission Doll 10 \ 7 \ 2 Horse 5 9 3