Exam 5: Inventories and Cost of Goods Sold

Cooking Corner Cooking Corner reported inventory on its balance sheet at December 31,2013 at $32,000.During 2014,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 2014,inventory on hand totaled to $45,000.Net sales for 2014 totaled $1,300,000.Cooking Corner employs a periodic inventory system. Refer to the information about Cooking Corner. How much would Cooking Corner pay its supplier if Cooking Corner paid for one-half of the goods acquired within the discount period,and the other half after the expiration of the discount period?

Ending inventory valued under the FIFO method will be the same regardless of whether the periodic system or the perpetual system is used.

Under FIFO,the units in the ending inventory represent the oldest purchase(s).

Quan uses a periodic inventory system.At the end of April,Quan had 20 units on hand. If Quan,Inc.uses FIFO inventory costing,how much is cost of goods sold for April?

Which method assigns the cost of the most recent items purchased to cost of goods sold?

Lalli Corp.sold merchandise to a customer on credit.The invoice amount was $1,000;the invoice date was June 10;credit terms were 1/10,n/30.Which one of the following statements is true?

Giant-Mart purchased a large shipment of shoes from Primus,Inc.on credit near the end of its accounting period.Primus shipped the shoes in January and Giant-Mart received the shoes in February.Assume that Giant-Mart's accounting period ends on January 31,while Giant's accounting period ends on May 31.Answer each independent question in the set that follows. REQUIRED: Under what shipping terms would Giant-Mart include the shoes as part of inventory on its January 31 balance sheet?

The ____________________ method most nearly approximates replacement cost of inventory on the balance sheet.

Payment for the acquisition of inventories is shown on the statement of cash flows as

The cost of goods sold for Johnnie,Inc.totaled $1,305,000.Sales returns and purchase returns were $3,000 and $4,000,respectively.Purchases totaled $1,300,000.Discounts taken by Johnnie totaled $7,000,while discounts taken by customers totaled $5,000.Beginning inventory was $90,000.Determine the amount of ending inventory to be reported on Johnnie,Inc.'s balance sheet.

Givens Corp. Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Refer to information for Givens Corp. Calculate the cost of goods sold for Givens Corp.

Assume that a company is experiencing increasing inventory prices and prepares its financial statements in accordance with IFRS.Which costing method should it use to pay the least amount of taxes? Explain your answer.

Which one of the following statements regarding changing inventory methods is true?

Bower Corp.'s cost of sales has remained steady over the last two years.During this same time period,however,its inventory has increased considerably.What does this information tell you about the company's inventory turnover? Explain your answer.

On the income statement of a merchandising company,cost of goods is added to net sales to arrive at gross margin or gross profit.

All of the following statements are true except:

Credit terms of n/30 mean that the net amount of the invoice,less any returns or allowances,is due within 30 days of the date of the invoice.

Cost of goods sold is the difference between costs available for sale and beginning inventory.

For what reason would retailers like The Gap select an accounting period that ends on or near the end of January?

Under LIFO,the units in the ending inventory represent the most recent purchase(s).