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Exam 6: Inventories

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Question 21

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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.

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Question 22

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

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Question 23

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Use the information below to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. $\begin{array}{|c|l|c|c|}\hline \text { Date } & {\text { Blankets }} & \text { Units } & \text { Cost } \\\hline \text { May } 3 & \text { Purchase } & 5 & \$ 20 \\\hline 10 & \text { Sale } & 3 & \\\hline 17 & \text { Purchase } & 10 & \$ 24 \\\hline 20 & \text { Sale } & 6 & \\\hline 23 & \text { Sale } & 3 & \\\hline 30 & \text { Purchase } & 10 & \$ 30 \\\hline\end{array}$ -Assuming that the company uses the perpetual inventory system,determine the Gross Profit for the month of May using the LIFO cost method.

On the basis of the following data,what is the estimated cost of the merchandise inventory on May 31 using the retail method?

The following lots of a particular commodity were available for sale during the year: -What is the amount of cost of merchandise sold for the year according to the FIFO method?

During a period of consistently rising prices,the method of inventory that will result in reporting the greatest cost of merchandise sold is

For the year ended December 31,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.

The units of an item available for sale during the year were as follows: There are 30 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using FIFO.

Cost flow is in the reverse order in which costs were incurred when using

During periods of decreasing costs,the use of the LIFO method of costing inventory will result in a lower amount of net income than would result from the use of the FIFO method.

Based on the following information,compute a inventory turnover; b average daily cost of merchandise sold using a 365 day year; and c number of days' sales in inventory.

$\begin{array}{l}\begin{array}{lll}\text { Sep. } & 1& \text { Inventory } \\&4 & \text { Sold } \\& 10 & \text { Purchased } \\& 17 & \text { Sold } \\& 30 & \text { Purchased } \\\end{array}\begin{array}{lll}\quad\quad\quad\quad\quad\quad\\\end{array}\begin{array}{lll}20& \text { units at \$20 } \\10& \text { units } \\30& \text { units at \$25 } \\20& \text { units } \\10& \text { units at \$30 } \\\end{array}\end{array}$ -If Addison uses FIFO,the cost of the ending merchandise inventory on September 30 is

Inventory turnover measures the length of time it takes to acquire,sell,and replace the inventory.

$\begin{array}{l}\begin{array}{lll}\text { Sep. } & 1& \text { Inventory } \\&4 & \text { Sold } \\& 10 & \text { Purchased } \\& 17 & \text { Sold } \\& 30 & \text { Purchased } \\\end{array}\begin{array}{lll}\quad\quad\quad\quad\quad\quad\\\end{array}\begin{array}{lll}20& \text { units at \$20 } \\10& \text { units } \\30& \text { units at \$25 } \\20& \text { units } \\10& \text { units at \$30 } \\\end{array}\end{array}$ -If Addison uses LIFO,the cost of the ending merchandise inventory on September 30 is

Inventory controls start when the merchandise is shelved in the store area.

The inventory data for an item for November are: $\begin{array}{l}\begin{array}{lll}\text { Nov } & 1& \text { Inventory } \\&4 & \text { Sold } \\& 10 & \text { Purchased } \\& 17 & \text { Sold } \\& 30 & \text { Purchased } \\\end{array}\begin{array}{lll}\quad\quad\quad\quad\quad\quad\\\end{array}\begin{array}{lll}20& \text { units at \$19 } \\10& \text { units } \\30& \text { units at \$20 } \\20& \text { units } \\10& \text { units at \$21 } \\\end{array}\end{array}$ Using a perpetual system,what is the cost of the merchandise sold for November if the company uses LIFO?

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

A purchase order establishes an initial record of the receipt of the inventory.

If ending inventory for the year is overstated,stockholders' equity reported on the balance sheet at the end of the year is understated.

The inventory data for an item for November are: $\begin{array}{l}\begin{array}{lll}\text { Nov } & 1& \text { Inventory } \\&4 & \text { Sold } \\& 10 & \text { Purchased } \\& 17 & \text { Sold } \\& 30 & \text { Purchased } \\\end{array}\begin{array}{lll}\quad\quad\quad\quad\quad\quad\\\end{array}\begin{array}{lll}20& \text { units at \$19 } \\10& \text { units } \\30& \text { units at \$20 } \\20& \text { units } \\10& \text { units at \$21 } \\\end{array}\end{array}$ Using a perpetual system,what is the cost of the merchandise sold for November if the company uses FIFO?