Given the following inventory and inventory related accounts, solve for the unknown amounts. $\begin{array}{lll}&\text { Case } A&\text { Case } B\\ \text { Beginning raw materials } & \text { (a) } & \$ 50 \\ \text { Raw materials purchases } & \$ 100 & \text { (f) } \\ \text { Ending raw materials } & 20 & 30 \\ \text { Raw materials transfers } & 80 & 90 \\ \text { Beginning work-in-process } & \text { (b) } & 40\\\text { Direct labor } & 30 & (\mathrm{~g}) \\ \text { Direct material } & \text { (c) } & 90 \\ \text { Manufacturing overhead } & 40 & 20 \\ \text { Ending work-in-process } & 50 & 40 \\ \text { Work-in-process transfers } & 160 & 130\\ \text { Beginning finished goods } & 40 & \text { (h) } \\ \text { Transfers in } & \text { (d) } & \text { (i) } \\ \text { Ending finished goods } & 30 & 20 \\ \text { Cost of goods sold } & \text { (e) } & 120 \end{array}$

The answer of Given the following inventory and inventory related...

The inventory record for a particular item for Year 2 appears below. $\begin{array}{|l|l|l|l|} \hline \text { Inventory, January 1, Year 2 } & 20,000 & \$ 0.20 & \$ 4,000 \\ \hline \text { Purchases: } & & & \\ \hline \text { March 2 } & 4,000 & .24 & \$ 960 \\ \hline \text { April 30 } & 3,000 & .28 & 840 \\ \hline \text { June 15 } & 6,000 & .32 & 1,920 \\ \hline \text { September 30 } & 2,000 & .26 & 520 \\ \hline \text { December } 15 & 1.000 & .20 & 200 \\ \hline \text { Total purchases } & 16.000 & & \$ 4,440 \\ \hline \text { Total available for sale } & 36,000 & & \$ 8,440 \\ \hline \text { Units sold } & 28,000 & & \\ \hline \end{array}$ Refer to the Inventory Record example.The cost of goods sold for year 2 under FIFO is:

A) $6,040 B) $6,120 C) $6,320 D) $6,520 E) $6,840 A) $6,040 B) $6,120 C) $6,320 D) $6,520 E) $6,840

Fix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each.These switchplates sell for $7.00 each.The following schedule presents the sales and purchases of this item during the month of November. $\begin{array}{|l|l|l|l|} \hline&\text { Purchases }\\ \hline \text { Date of Transaction } & \text { Quantity Received } & \text { Unit Cost } & \text { Units Sold } \\ \hline \text { November 5 } & & & 100 \\ \hline \text { November 7 } & 200 & \$ 4.20 & \\ \hline \text { November } 9 & & & 150 \\ \hline \text { November } 11 & 200 & 4.40 & \\ \hline \text { November } 17 & & & 220 \\ \hline \text { November } 22 & 250 & 4.80 & \\ \hline \text { November } 29 & & & 100 \\ \hline \end{array}$ (CMA adapted, Dec 92 #27) Refer to the Fix-It Hardware example.If Fix-It uses weighted average inventory pricing, the gross profit for November would be

A) $1,046 B) $1,482 C) $1,516 D) $1,574 E) $1,146 A) $1,046 B) $1,482 C) $1,516 D) $1,574 E) $1,146

Fix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each.These switchplates sell for $7.00 each.The following schedule presents the sales and purchases of this item during the month of November. $\begin{array}{|l|l|l|l|} \hline&\text { Purchases }\\ \hline \text { Date of Transaction } & \text { Quantity Received } & \text { Unit Cost } & \text { Units Sold } \\ \hline \text { November 5 } & & & 100 \\ \hline \text { November 7 } & 200 & \$ 4.20 & \\ \hline \text { November } 9 & & & 150 \\ \hline \text { November } 11 & 200 & 4.40 & \\ \hline \text { November } 17 & & & 220 \\ \hline \text { November } 22 & 250 & 4.80 & \\ \hline \text { November } 29 & & & 100 \\ \hline \end{array}$ (CMA adapted, Dec 92 #28) Refer to the Fix-It Hardware example.If Fix-It uses (periodic) LIFO inventory pricing, the cost of goods sold for November would be

A) $2,416 B) $2,474 C) $2,508 D) $2,584 E) $2,684 A) $2,416 B) $2,474 C) $2,508 D) $2,584 E) $2,684

Fix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each.These switchplates sell for $7.00 each.The following schedule presents the sales and purchases of this item during the month of November. $\begin{array}{|l|l|l|l|} \hline&\text { Purchases }\\ \hline \text { Date of Transaction } & \text { Quantity Received } & \text { Unit Cost } & \text { Units Sold } \\ \hline \text { November 5 } & & & 100 \\ \hline \text { November 7 } & 200 & \$ 4.20 & \\ \hline \text { November } 9 & & & 150 \\ \hline \text { November } 11 & 200 & 4.40 & \\ \hline \text { November } 17 & & & 220 \\ \hline \text { November } 22 & 250 & 4.80 & \\ \hline \text { November } 29 & & & 100 \\ \hline \end{array}$ (CMA adapted, Dec 92 #25) Refer to the Fix-It Hardware example.If Fix-It uses FIFO inventory pricing, the value of the inventory on November 30 would be

A) $936 B) $1,046 C) $1,076 D) $1,104 E) $1,204 A) $936 B) $1,046 C) $1,076 D) $1,104 E) $1,204

Exam 9: Working Capital

The journal entry to record the cost of warranty repairs that were incurred during the current period, but related to sales made in prior years, includes a debit to Warranty Expense.

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(True/False)

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Question 1

Correct Answer:

Verified

False

Sharp Inc.manufactures high quality sunglasses that carry the endorsements of several sports personalities.In an effort to achieve sales targets for the fourth quarter of the year, Sharp Inc.pressured its independent distributors to make unusually large orders of the sunglasses.Low-priced imitations of these sunglasses hit the market soon thereafter, causing the distributors to accumulate large inventories.The distributors shipped these sunglasses back to Sharp Inc.Sharp Inc.stored the returned sunglasses in a remote warehouse out of the view of its auditors and did not record them as returned goods.The actions

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Question 2

Correct Answer:

Verified

C

On August 1, Covington Motors pays £18,000 for insurance coverage for the next 12 months.On August 1, the firm records the following journal entry:

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Question 3

Correct Answer:

Verified

B

Given the following inventory and inventory related accounts, solve for the unknown amounts. Case A Case B Beginning raw materials (a) \ 50 Raw materials purchases \ 100 (f) Ending raw materials 20 30 Raw materials transfers 80 90 Beginning work-in-process (b) 40 Direct labor 30 () Direct material (c) 90 Manufacturing overhead 40 20 Ending work-in-process 50 40 Work-in-process transfers 160 130 Beginning finished goods 40 (h) Transfers in (d) (i) Ending finished goods 30 20 Cost of goods sold (e) 120

(Short Answer)

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Question 4

Which of the following is not a generally accepted basis for inventory valuation?

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Question 5

The inventory record for a particular item for Year 2 appears below. Inventory, January 1, Year 2 20,000 \ 0.20 \ 4,000 Purchases: March 2 4,000 .24 \ 960 April 30 3,000 .28 840 June 15 6,000 .32 1,920 September 30 2,000 .26 520 December 15 1.000 .20 200 Total purchases 16.000 \ 4,440 Total available for sale 36,000 \ 8,440 Units sold 28,000 Refer to the Inventory Record example.The cost of goods sold for year 2 under FIFO is:

(Multiple Choice)

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Question 6

Focus Company sells merchandise with a one year warranty. In 2013, sales consisted of 2,500 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2013 and 70% in 2014. In the 2013 income statement, Focus should show warranty expense of

(Multiple Choice)

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Question 7

U.S.GAAP and IFRS permit firms to remeasure inventories upward to an amount exceeding their acquisition cost.

(True/False)

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Question 8

Fix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each.These switchplates sell for $7.00 each.The following schedule presents the sales and purchases of this item during the month of November. Purchases Date of Transaction Quantity Received Unit Cost Units Sold November 5 100 November 7 200 \ 4.20 November 9 150 November 11 200 4.40 November 17 220 November 22 250 4.80 November 29 100 (CMA adapted, Dec 92 #27) Refer to the Fix-It Hardware example.If Fix-It uses weighted average inventory pricing, the gross profit for November would be

(Multiple Choice)

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Question 9

For merchandising firms, inventory items are valued at acquisition cost which includes

(Multiple Choice)

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Question 10

Given the following inventory and inventory-related accounts, solve for the unknown amounts: Case A Case B Beginning raw materials \ 10 \ 30 Raw materials purchases 100 70 Ending raw materials 70 50 Raw materials transfers (a) (f) Beginning work-in-process 50 40 Direct labor 50 (g) Direct material b) 10 Manufacturing overhead 10 10 Ending work-in-process 40 100 Work-in-process transfers (c) 20 Beginning finished goods 10 100 Transfers in (d) 30 Ending finished goods 100 (h)

(Short Answer)

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Question 11

Youngstown Company sells merchandise with a one year warranty. Sales consisted of 2,500 units in 2013 and 2,000 units in 2014. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2013 and 70% in 2014 for the 2013 sales.Similarly, 30% of repairs will be made in 2014 and 70% in 2015 for the 2014 sales. In the 2014 income statement, how much of the warranty expense shown will be due to 2013 sales?

(Multiple Choice)

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Question 12

Fix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each.These switchplates sell for $7.00 each.The following schedule presents the sales and purchases of this item during the month of November. Purchases Date of Transaction Quantity Received Unit Cost Units Sold November 5 100 November 7 200 \ 4.20 November 9 150 November 11 200 4.40 November 17 220 November 22 250 4.80 November 29 100 (CMA adapted, Dec 92 #28) Refer to the Fix-It Hardware example.If Fix-It uses (periodic) LIFO inventory pricing, the cost of goods sold for November would be

(Multiple Choice)

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Question 13

Brussels Products began its Belgian operations on January 1.The following is the journal entry for the issuance, to producing departments of raw materials costing €20,000:

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Question 14

Describe the concept of working capital.

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Question 15

Of the three cost-flow assumptions, when inventory costs have been rising and inventory amounts increasing, LIFO results in balance sheet figures that are ___, cost of goods sold will _, and ___ reported net income

(Multiple Choice)

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Question 16

(CMA adapted, Dec 95 #27) Somali Inc.is a profitable company with the goal to maximize cash flow.A valid reason for Somali not to adopt the last-in, first-out (LIFO) method of inventory valuation is the

(Multiple Choice)

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Question 17

Of the three cost-flow assumptions, when prices rise FIFO results in balance sheet figures that are ___, cost of goods sold will _, and ___ reported net income

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Question 18

IFRS requires that firms accrue the warranty expense and the related warranty liability when they can "reasonably estimate" the amount, while U.S.GAAP does not.

(True/False)

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Question 19

Fix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each.These switchplates sell for $7.00 each.The following schedule presents the sales and purchases of this item during the month of November. Purchases Date of Transaction Quantity Received Unit Cost Units Sold November 5 100 November 7 200 \ 4.20 November 9 150 November 11 200 4.40 November 17 220 November 22 250 4.80 November 29 100 (CMA adapted, Dec 92 #25) Refer to the Fix-It Hardware example.If Fix-It uses FIFO inventory pricing, the value of the inventory on November 30 would be

(Multiple Choice)

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Question 20

The journal entry to record the cost of warranty repairs that were incurred during the current period, but related to sales made in prior years, includes a debit to Warranty Expense.

On August 1, Covington Motors pays £18,000 for insurance coverage for the next 12 months.On August 1, the firm records the following journal entry:

Which of the following is not a generally accepted basis for inventory valuation?

Focus Company sells merchandise with a one year warranty. In 2013, sales consisted of 2,500 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2013 and 70% in 2014. In the 2013 income statement, Focus should show warranty expense of

U.S.GAAP and IFRS permit firms to remeasure inventories upward to an amount exceeding their acquisition cost.

For merchandising firms, inventory items are valued at acquisition cost which includes

Brussels Products began its Belgian operations on January 1.The following is the journal entry for the issuance, to producing departments of raw materials costing €20,000:

Describe the concept of working capital.

Of the three cost-flow assumptions, when inventory costs have been rising and inventory amounts increasing, LIFO results in balance sheet figures that are ___, cost of goods sold will _, and ___ reported net income

(CMA adapted, Dec 95 #27) Somali Inc.is a profitable company with the goal to maximize cash flow.A valid reason for Somali not to adopt the last-in, first-out (LIFO) method of inventory valuation is the

Of the three cost-flow assumptions, when prices rise FIFO results in balance sheet figures that are ___, cost of goods sold will _, and ___ reported net income

IFRS requires that firms accrue the warranty expense and the related warranty liability when they can "reasonably estimate" the amount, while U.S.GAAP does not.

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

Exam 9: Working Capital

The journal entry to record the cost of warranty repairs that were incurred during the current period, but related to sales made in prior years, includes a debit to Warranty Expense.

On August 1, Covington Motors pays £18,000 for insurance coverage for the next 12 months.On August 1, the firm records the following journal entry:

Which of the following is not a generally accepted basis for inventory valuation?

Focus Company sells merchandise with a one year warranty. In 2013, sales consisted of 2,500 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2013 and 70% in 2014. In the 2013 income statement, Focus should show warranty expense of

U.S.GAAP and IFRS permit firms to remeasure inventories upward to an amount exceeding their acquisition cost.

For merchandising firms, inventory items are valued at acquisition cost which includes

Brussels Products began its Belgian operations on January 1.The following is the journal entry for the issuance, to producing departments of raw materials costing €20,000:

Describe the concept of working capital.

Of the three cost-flow assumptions, when inventory costs have been rising and inventory amounts increasing, LIFO results in balance sheet figures that are _____, cost of goods sold will _____, and _____ reported net income

(CMA adapted, Dec 95 #27) Somali Inc.is a profitable company with the goal to maximize cash flow.A valid reason for Somali not to adopt the last-in, first-out (LIFO) method of inventory valuation is the

Of the three cost-flow assumptions, when prices rise FIFO results in balance sheet figures that are _____, cost of goods sold will _____, and _____ reported net income

IFRS requires that firms accrue the warranty expense and the related warranty liability when they can "reasonably estimate" the amount, while U.S.GAAP does not.

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

Of the three cost-flow assumptions, when inventory costs have been rising and inventory amounts increasing, LIFO results in balance sheet figures that are ___, cost of goods sold will _, and ___ reported net income

Of the three cost-flow assumptions, when prices rise FIFO results in balance sheet figures that are ___, cost of goods sold will _, and ___ reported net income