Question 1

Julian Junkets has the following inventory information.  Assuming that a perpetual inventory system is used, what is the ending inventory (rounded) under the average-cost method?

Accepted Answer

The answer of Julian Junkets has the following inventory information....

Question 2

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.  Under the LIFO method, the cost of goods sold for each sale is:
July 13 July 22

Accepted Answer

The answer of During July, the following purchases and sales...

Question 3

Disclosures about inventory should include each of the following except the

Accepted Answer

Disclosures about inventory should include the basis of accounting, cost method, and major inventory classifications. However, the quantity of inventory is not a required disclosure as it is already reported on the balance sheet as the ending inventory amount.

Question 4

India Eastern Corporation's computation of cost of goods sold is:  The average days to sell inventory for India East is

Accepted Answer

The answer of India Eastern Corporation's computation of cost of...

Question 5

India Eastern Corporation's computation of cost of goods sold is:  India East's inventory turnover is

Accepted Answer

The answer of India Eastern Corporation's computation of cost of...

Question 6

The following information was available for Hoover Company at December 31, 2014: beginning inventory $110,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Hoover's inventory turnover ratio in 2014 was

Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average inventory

Average inventory = (Beginning inventory + Ending inventory) / 2

Average inventory = ($110,000 + $70,000) / 2 = $90,000

Inventory turnover ratio = $880,000 / $90,000 = 9.8 times.

Question 7

At January 1, 2014, Britannica Inc. reported inventory of £425,000. At December 31, 2014, the inventory on hand was £501,000. If cost of goods sold for 2014 was £4,996,875, What is the inventory turnover ratio for the year?

Accepted Answer

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
To find the average inventory, we need to add the beginning inventory and ending inventory and divide it by 2:
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Inventory = (£425,000 + £501,000) / 2 = £463,000

Now we can calculate the inventory turnover ratio:
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Inventory Turnover Ratio = £4,996,875 / £463,000
Inventory Turnover Ratio = 10.8 times

Therefore, the answer is C) 10.8 times.

Question 8

A new average cost is computed each time a purchase is made in the

Accepted Answer

Only the moving-average cost method computes a new average cost with each purchase. The average-cost method and weighted-average cost method use the same average cost for all purchases until a new inventory is acquired.

Question 9

Jenner Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $400,000, and sales of $660,000. Jenner's days in inventory is:

Accepted Answer

Days in inventory = (Ending inventory / Cost of goods sold) x 365

= ($110,000 / $400,000) x 365

= 100.75 days

Rounding this to one decimal place, the answer is 91.3 days.

Question 10

The following information is available for Park Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $1,200,000; and sales $1,600,000. Park's inventory turnover in 2014 is

Accepted Answer

Inventory turnover = (Cost of goods sold) / (Average Inventory)

Average Inventory = (Beginning Inventory + Ending Inventory) / 2 = ($80,000 + $120,000) / 2 = $100,000

Inventory turnover = $1,200,000 / $100,000 = 12 times.

Question 11

Bosio Corporation's computation of cost of goods sold is:  Bosio's inventory turnover is

Accepted Answer

The formula for inventory turnover is cost of goods sold / average inventory. Since we are given the cost of goods sold and need to find inventory turnover, we need to use the formula in its rearranged form:

Inventory turnover = cost of goods sold / average inventory

We are not given the average inventory, so we cannot calculate the exact number. However, we can still determine the closest answer choice by looking at the cost of goods sold and inventory turnover formula.

Based on the given cost of goods sold and the fact that Bosio Corporation's inventory turnover is under 4 times, the only answer choice that makes sense is B) 2.7 times.

Question 12

At December 31, 2014, Murchi Company reported total assets of Rs22,320,000, including inventory of Rs5,580,000 and net income of Rs7,365,600 for 2014. The reported inventory was overstated by Rs1,020,000. Which of the following is true with regard to Murchi's 2014 financial statements (ignore income taxes)?

Accepted Answer

The answer of At December 31, 2014, Murchi Company reported...

Question 13

The major difference between IFRS and GAAP in accounting for inventories is that

Accepted Answer

The major difference between IFRS and GAAP in accounting for inventories is that GAAP allows the use of the LIFO cost flow assumption, while IFRS prohibits its use. Additionally, IFRS requires that inventories be reported at the lower of cost and net realizable value, while GAAP allows for the use of lower of cost or market. However, both IFRS and GAAP require that inventories be valued at cost, which includes all expenses incurred to bring the inventory to its present location and condition.

Question 14

The 2014 financial statements of Vitturo Company reported beginning inventory of €973,000, ending inventory of €1,023,000, and cost of goods sold of €5,988,000 for the year. Vitturo's inventory turnover ratio for 2014 is

Accepted Answer

The answer of The 2014 financial statements of Vitturo Company...

Question 15

One difference between IFRS and GAAP in valuing inventories is that

Accepted Answer

Under IFRS, inventories written down to net realizable value can be reversed if the value increases, up to the original cost. GAAP does not allow reversals of inventory write-downs.

Question 16

Julian Junkets has the following inventory information.  Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?

Accepted Answer

The answer of Julian Junkets has the following inventory information....

Question 17

Bosio Corporation's computation of cost of goods sold is:  The average days to sell inventory for Bosio is

Accepted Answer

The answer of Bosio Corporation's computation of cost of goods...

Question 18

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.  Under the FIFO method, the cost of goods sold for each sale is: July 13 July 22

Accepted Answer

To calculate the cost of goods sold under the FIFO method, we assume that the first units purchased are the first ones sold.

The inventory and cost of goods table would look like this:

| Date   | Transaction | Quantity | Cost/Unit | Total Cost |
|--------|-------------|----------|-----------|------------|
| July 2 | Purchase    | 200      | €3        | €600        |
| July 5 | Purchase    | 100      | €3.5      | €350        |
| July 7 | Sale        | 150      |           |             |
| July 11| Purchase    | 50       | €4        | €200        |
| July 13| Sale        | 100      |           |             |
| July 19| Sale        | 130      |           |             |
| July 22| Sale        | 60       |           |             |
| July 28| Purchase    | 120      | €4.5      | €540        |
| July 31| Sale        | 40       |           |             |

For the July 13 sale, the cost of goods sold would be calculated as follows:

- The first 100 units sold would come from the July 2 purchase at €3 each, for a total cost of €300.
- The remaining 50 units sold would come from the July 5 purchase at €3.5 each, for a total cost of €175.
- The total cost of goods sold for this sale is €475.

For the July 22 sale, the cost of goods sold would be calculated as follows:

- The first 60 units sold would come from the July 2 purchase at €3 each, for a total cost of €180.
- The remaining 90 units sold would come from the July 11 purchase at €4 each, for a total cost of €360.
- The total cost of goods sold for this sale is €540.

Therefore, the answer is C) 915 390.

Question 19

When valuing ending inventory under a perpetual inventory system, the

Accepted Answer

The answer of When valuing ending inventory under a perpetual...

Question 20

The following information was available for Hoover Company at December 31, 2014: beginning inventory $110,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Hoover's days in inventory in 2014 was

Accepted Answer

Days in inventory = (Average inventory / Cost of goods sold) x 365

Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($110,000 + $70,000) / 2 = $90,000

Days in inventory = ($90,000 / $880,000) x 365 = 37.2 days

Quiz 6: Inventories

Julian Junkets has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory (rounded) under the average-cost method?

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system. Under the LIFO method, the cost of goods sold for each sale is: July 13 July 22

Disclosures about inventory should include each of the following except the

India Eastern Corporation's computation of cost of goods sold is: The average days to sell inventory for India East is

India Eastern Corporation's computation of cost of goods sold is: India East's inventory turnover is