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Exam 6: Inventories

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Question 81

True/False

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Inventory errors, if not discovered, will self-correct within two years.

A) True
B) False

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Question 82

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The value of ending inventory using FIFO is

A) $1,250
B) $1,350
C) $1,375
D) $1,150

E) None of the above
F) C) and D)

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Question 83

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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. Depot Max's number of days' sales in inventory is closest to

Damaged merchandise that can be sold only at prices below cost should be valued at

What is the amount of the inventory at the end of the year rounded to nearest dollar using the average cost method?

Match each description to the appropriate inventory system a or b) . -Under this system, only revenue is recorded when sales are made.

Excess inventory results in all of the following except

Complete the chart, indicating whether LIFO or FIFO would give the highest and lowest amounts for each item, assuming a period of increasing costs.

On the basis of the following data, estimate the cost of the merchandise inventory at March 31 by the retail method.

FIFO is the inventory costing method that follows the physical flow of the goods.

Which of the following is not an example for safeguarding inventory?

In the retail inventory method, the cost to retail ratio is equal to the cost of merchandise sold divided by the retail price of the merchandise sold.

Use of the retail inventory method requires taking a physical count of inventory.

If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole. $\begin{array} { | l | l | l | l | } \hline \text { Item } & \text { Inventory Quantity } & \text { Unit Cost Price } & \text { Unit Market Price } \\\hline \text { Product C } & 420 & \$ 6 & \$ 5 \\\hline \text { Product D } & 370 & 12 & 14 \\\hline\end{array}$

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are not in the possession of the consignor.

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: $\begin{array} { r l l } \text { Sep. } 1 & \text { Inventory } & 20 \text { units at } \$ 20 \\4 & \text { Sold } & 10 \text { units } \\10 & \text { Purchased } & 30 \text { units at } \$ 25 \\17 & \text { Sold } & 20 \text { units } \\30 & \text { Purchased } & 10 \text { units at } \$ 30\end{array}$ -If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is

Beginning inventory, purchases, and sales for an inventory item are as follows: Assuming a perpetual inventory system and the last-in, first-out method, determine a) the cost of the merchandise sold for the September 30 sale and b) the inventory on September 30.

Which of the following companies would be more likely to use the specific identification inventory costing method?