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Exam 17: Merchandise Inventory

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Question 51

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The gross profit method of determining ending inventory cost

A) requires that a firm keep inventory and purchases data at retail value as well as at cost.
B) provides accurate information about the number of units in inventory.
C) can be used without taking a physical count of merchandise.
D) requires that the inventory be classified into groups of items of about the same rate of markon.

E) C) and D)
F) A) and C)

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Question 52

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Duncan Industries' inventory of coats (Model XL)during 2019 is given below. The company uses a periodic inventory system. What is the cost of the ending inventory and the cost of goods sold? 1. Assume Duncan Industries utilizes the FIFO method 2. Assume Duncan Industries utilizes the LIFO method 3. Assume Duncan Industries utilizes the average cost method

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1. (FIFO) EI: $280.00 = 4 x $70; COGS:$8...

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Question 53

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In the---------- method of inventory valuation, inventory cost is determined by multiplying the number of units in inventory by a unit cost, which is calculated by dividing the cost of goods available for sale by the units of merchandise available for sale.

Information about the Maxwell Company's inventory of one item during 2019 is given below. Assuming that Maxwell uses a periodic system, compute the cost of the ending inventory and cost o goods sold under each of the following methods. (Round answers to two decimal places.) 1. Average cost method 2. First in, first out (FIFO)method 3. Last in, first out (LIFO)method

The most conservative method of applying the lower of cost or net realizable value rule is to use the lower of total cost or total net realizable value by groups.

The--------- method of inventory valuation is a procedure developed for charging the current costs of goods against current sales prices.

A matching of the most recent costs to revenue results from the use of

Which of the following inventory costing procedures requires a physical count of merchandise a minimum of once a year at year end?

The cost of the earliest merchandise purchased is assigned to ending inventory when a company uses

The June 1 inventory of the Kaufman Company had a cost of $8,000 and a retail value of $20,000. During June, merchandise was purchased for $36,000 and marked to sell for $60,000. June sales totaled $45,000. Use the retail method to compute the answers to the following questions. 1. What is the retail value of the ending inventory as of June 30? 2. What is the approximate cost of the ending inventory? 3. What is the cost of goods sold during June?

In periods of rising prices, use of the---------- method of inventory valuation results in the lowest inventory cost on the balance sheet.

An assumption necessary to use the Gross Profit method is that the

The inventory valuation method which tends to smooth out periodic fluctuations in cost is:

Many retail stores take a periodic inventory at retail values, using the sales price marked on the merchandise.

The use of the LIFO method of inventory valuation

If a firm uses the FIFO method of inventory valuation for tax purposes, it must use the FIFO method for financial accounting.

For internal control, unit counts used to compute the inventory should be verified by thorough spot checks.

In periods of rising prices, the inventory valuation procedure that results in the highest net income is

Distinguish between periodic inventory, perpetual inventory, and physical inventory.

A company reported the following information regarding its inventory: Beginning inventory: cost of $63,000; retail of $140,000 Net purchases: cost $42,000; retail $84,000 Sales at retail: $160,000 The year-end inventory showed $64,000 worth of merchandise available at retail prices. What is the cost of the ending inventory?