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Exam 5: Reporting and Analyzing Inventories

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Question 81

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Given the following information,determine the cost of ending inventory at December 31 using the LIFO 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.

A) $51.75
B) $83.22
C) $41.30
D) $94.00
E) $50.75

F) D) and E)
G) C) and E)

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Question 82

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LIFO is the preferred inventory costing method when costs are rising and managers have incentives to report higher income.When income is higher,managers may earn bonuses and have more job security and a better reputation.

A) True
B) False

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Question 83

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The consistency concept requires a company to use the same accounting methods period after period,so that financial statements are comparable across periods.

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

Three key variables determine the dollar value of inventory: (1) inventory quantity, (2) costs of inventory,and (3) cost flow assumption.

A company has the following per unit original costs and replacement costs for its inventory: Part A: 50 units with a cost of $5 and replacement cost of $4.50. Part B: 75 units with a cost of $6 and replacement cost of $6.50. Part C: 160 units with a cost of $3 and replacement cost of $2.50. Under the lower of cost or market method,the total value of this company's ending inventory must be reported as:

A corporation has provided the following information about one of its products: During the year,590 units were sold.What is ending inventory using the weighted average periodic inventory method? (Round the weighted average cost per unit to two decimal points; round the ending inventory to the nearest whole dollar.)

A company reported the following information regarding its inventory. Beginning inventory: cost is $70,000; retail is $130,000. Net purchases: cost is $65,000; retail is $120,000. Sales at retail: $145,000. The year-end inventory showed $105,000 worth of merchandise available at retail prices.What is the cost of the ending inventory?

Given the following information,determine the cost of goods sold for November 30 using the FIFO 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.

The conservatism constraint requires that when more than one estimate of the amounts that are to be received or paid in the future exist and these estimates are about equally likely,then the less optimistic amount is used.

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.

Given the following information,determine the cost of ending inventory at November 30 using the weighted average 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.

Lansing Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: During the year,1,150 laptop computers were sold.What was ending inventory using the FIFO cost flow assumption?

When purchase costs regularly rise,the ___________________ method of inventory valuation yields the highest gross profit and net income.

A company had inventory on November 1 of 5 units at a cost of $20 each.On November 2,they purchased 10 units at $22 each.On November 6,they purchased 6 units at $25 each.On November 8,8 units were sold for $55 each.Using the FIFO perpetual inventory method,what was the value of the inventory on November 8 after the sale?

A company has the following per unit original costs and replacement costs for its inventory: Part A: 10 units with a cost of $3 and replacement cost of $2.50. Part B: 40 units with a cost of $9 and replacement cost of $9.50. Part C: 75 units with a cost of $8 and replacement cost of $7.50. Under the lower of cost or market method,the total value of this company's ending inventory must be reported as:

When taking a physical count of inventory,the use of prenumbered inventory tickets assists in the control process.

Errors in the period-end inventory balances only have an impact on the current period's records and financial statements.

Given the following information,determine the cost of goods sold for December 31 using the FIFO 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.

Managers are able to make important decisions correctly using erroneous inventory balances because inventory errors are self-correcting and,as a result,are less serious.