Exam 5: Reporting and Analyzing Inventories

Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its days' sales in inventory equals:

Given the following information, determine the cost of goods sold at December 31 using the weighted average periodic inventory method: December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit. December 15: 20 units were purchased at $10.15 per unit. December 22: 18 units were sold at $35 per unit.

An advantage of the _________________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

Given the following items and costs as of the balance sheet date, determine the value of Light Company's merchandise inventory.

Given the following information, determine the cost of goods sold at November 30 using the LIFO perpetual inventory method. November 3: 15 units were purchased at $8 per unit. November 11: 18 units were purchased at $9.50 per unit. November 15: 15 units were sold at $45 per unit. November 18: 30 units were purchased at $10.75 per unit. November 30: 20 units were sold at $55 per unit.

If the shipping terms are _______________, ownership of the shipped goods passes from the seller to the buyer when the goods are shipped.

An overstatement of ending inventory will cause:

On June 30 a company needed to estimate its ending inventory to prepare its second quarter financial statements. The following information is available: Beginning inventory, April 1: $6,000 Net sales: $70,000 Net purchases: $36,000 The company's gross margin ratio is 12%. Using the gross profit method, the cost of goods sold would be:

Inventory errors cause misstatements on the current period's records and financial statements but do not affect future periods.

The ______________________ method of assigning costs to inventory and cost of goods sold assumes that the most recent purchases are sold first.

During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales as follows. What was the LIFO cost of the company's January 31 inventory?

When the __________ method is used with a periodic inventory system, cost of goods sold is assigned costs from the most recent purchases for the period.

Given the following information, determine the cost of goods sold at December 31 using the weighted average perpetual inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit. December 15: 20 units were purchased at $10.15 per unit. December 22: 18 units were sold at $35 per unit.

The conservatism constraint prescribes that the most optimistic amount is used when more than one estimate of the amount to be received or paid in the future exists and these estimates are about equally likely.

A company sells a climbing kit and uses the periodic inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during January were as follows: If the ending inventory is reported at $357, what inventory method was used?

The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.

Goods in transit are automatically included in a company's inventory account.

A company had 240 units of inventory at a cost of $148 each on April 1. On April 5, the company purchased 440 units of inventory for $168 each. On April 12, the company purchased 140 units for $208 each. On April 20, 480 units were sold. Given this information, determine the cost of the 480 units sold using the weighted average periodic inventory method. (Do not round your intermediate calculations; round the final answer to nearest dollar amount.)

A company had inventory of 14 units at a cost of $18 each on November 1. On November 2, they purchased 19 units at $19 each. On November 6, they purchased 15 units at $20 each. On November 8, they sold 36 units for $63 each. Using the LIFO periodic inventory method, what was the cost of the 36 units sold?

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.