Question 1

Bower Corp.'s cost of sales has remained steady over the last two years.During this same time period,however,its inventory has increased considerably.What does this information tell you about the company's inventory turnover? Explain your answer.

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Question 2

Explain the relationship between the valuation of inventory and income measurement as it relates to the balance sheet and the income statement.

Accepted Answer

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Question 3

Learning Tree,Inc.
The following data is available for one of the products sold by Learning Tree,Inc. ,which uses the perpetual inventory system:
  Refer to the data for Learning Tree,Inc.
Explain why the amounts for ending inventory are different under the two average cost methods--weighted average(periodic)and moving average(perpetual).

Accepted Answer

The answer of Learning Tree,Inc.
The following data is available for...

Question 4

What is LIFO inventory liquidation? Why is it important to disclose the effects of a LIFO inventory liquidation

Accepted Answer

The answer of What is LIFO inventory liquidation? Why is...

Question 5

Assume that a company is experiencing increasing inventory prices and prepares its financial statements in accordance with IFRS.Which costing method should it use to pay the least amount of taxes? Explain your answer.

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The answer of Assume that a company is experiencing increasing...

Question 6

Learning Tree,Inc.
The following data is available for one of the products sold by Learning Tree,Inc. ,which uses the perpetual inventory system:
  Refer to the data for Learning Tree,Inc.
Explain why the amounts are different for LIFO under periodic and perpetual inventory systems.

Accepted Answer

The answer of Learning Tree,Inc.
The following data is available for...

Question 7

Flores Department Store currently uses the periodic inventory system.
REQUIRED: Explain what the advantages would be to Flores if it uses the perpetual inventory system.Assume that Flores can use a computer system which is linked to its cash registers and that all products have bar codes that can be read by bar code readers attached to the cash registers.

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The answer of Flores Department Store currently uses the periodic...

Question 8

Giant-Mart purchased a big shipment of shoes from Right Balance,Inc.on credit near the end of its accounting period.Right Balance shipped the shoes in January and Giant-Mart received the shoes in February.Assume that Giant-Mart's accounting period ends on January 31,while Right Balance's accounting period ends on May 31.
REQUIRED: If the shoes are shipped FOB destination,who will pay the freight costs? If the shoes are shipped FOB shipping point,who will pay the freight costs?

Accepted Answer

The answer of Giant-Mart purchased a big shipment of shoes...

Question 9

Share,Inc.
The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system.
  Refer to the data for Share,Inc.
If the LIFO method is used,how much is cost of goods sold for May?

Accepted Answer

The answer of Share,Inc.
The following data is available for one...

Question 10

Several transactions of sales and purchase activities for Genoa Department Store are described below.
  REQUIRED: For each transaction described above,describe the economic effects of the transaction on the company under a periodic inventory system.

Accepted Answer

The answer of Several transactions of sales and purchase activities...

Question 11

Giant-Mart purchased a large shipment of shoes from Primus,Inc.on credit near the end of its accounting period.Primus shipped the shoes in January and Giant-Mart received the shoes in February.Assume that Giant-Mart's accounting period ends on January 31,while Giant's accounting period ends on May 31.Answer each independent question in the set that follows.
REQUIRED: Under what shipping terms would Giant-Mart include the shoes as part of inventory on its January 31 balance sheet?

Accepted Answer

The answer of Giant-Mart purchased a large shipment of shoes...

Question 12

Share,Inc.
The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system.
  Refer to the data for Share,Inc.
If the moving average method is used,how much is cost of goods sold for May?

Accepted Answer

The answer of Share,Inc.
The following data is available for one...

Question 13

In the following information from the 2014 annual reports of Technic Industries all figures have been rounded to millions of dollars.
   REQUIRED:
(1)Explain what the amount "adjustment to LIFO" represents.What effects has this "adjustment" had on Technic Industries' net earnings in 2013 and 2014?
(2)What method of determining cash flows from operating activities has Technic Industries used in preparing its statement of cash flows? Explain your answer.
(3)From 2013 to 2014,what change in the inventory balance (increase or decrease)occurred in each year as a result of operating activities? What was the effect on the company's cash flow each year as a result of the inventory change?

Accepted Answer

The answer of In the following information from the 2014...

Question 14

In the following information from the 2014 annual reports of Technic Industries all figures have been rounded to millions of dollars.
   REQUIRED:
(1)Describe what costs are included in each of the three types of inventories listed above for Technic Industries.
(2)Even though the footnote describing the inventory costing method(s)used by Technic Industries is not provided above,what can you conclude about the inventory costing method(s)used by the company?

Accepted Answer

The answer of In the following information from the 2014...

Question 15

Describe how the inventories of manufacturers differ from the inventories of retailers.

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Question 16

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

Accepted Answer

The answer of If an entity overstates its ending inventory...

Question 17

Giant-Mart purchased a large shipment of shoes from Primus,Inc.on credit near the end of its accounting period.Primus shipped the shoes in January and Giant-Mart received the shoes in February.Assume that Giant-Mart's accounting period ends on January 31,while Primus' accounting period ends on May 31.Answer each independent question in the set that follows.
REQUIRED: If the shoes are shipped FOB destination,when should Giant-Mart record the purchase? If the shoes are shipped FOB shipping point,when should Giant-Mart record the purchase?

Accepted Answer

The answer of Giant-Mart purchased a large shipment of shoes...

Question 18

Carrington Inc.manufactures digital cameras and has experienced noticeable declines in the purchase price of many of the components it uses,including memory components.Which inventory costing method should Carrington use if it wants to maximize net income? Explain your answer.

Accepted Answer

The answer of Carrington Inc.manufactures digital cameras and has experienced...

Question 19

Share,Inc.
The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system.
  Refer to the data for Share,Inc.
If the moving average method is used,how much is ending inventory on May 30?

Accepted Answer

The answer of Share,Inc.
The following data is available for one...

Quiz 5: Inventories and Cost of Goods Sold

Bower Corp.'s cost of sales has remained steady over the last two years.During this same time period,however,its inventory has increased considerably.What does this information tell you about the company's inventory turnover? Explain your answer.

Explain the relationship between the valuation of inventory and income measurement as it relates to the balance sheet and the income statement.

What is LIFO inventory liquidation? Why is it important to disclose the effects of a LIFO inventory liquidation

Assume that a company is experiencing increasing inventory prices and prepares its financial statements in accordance with IFRS.Which costing method should it use to pay the least amount of taxes? Explain your answer.

Learning Tree,Inc. The following data is available for one of the products sold by Learning Tree,Inc. ,which uses the perpetual inventory system: Refer to the data for Learning Tree,Inc. Explain why the amounts are different for LIFO under periodic and perpetual inventory systems.

Share,Inc. The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system. Refer to the data for Share,Inc. If the LIFO method is used,how much is cost of goods sold for May?

Several transactions of sales and purchase activities for Genoa Department Store are described below. REQUIRED: For each transaction described above,describe the economic effects of the transaction on the company under a periodic inventory system.

Share,Inc. The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system. Refer to the data for Share,Inc. If the moving average method is used,how much is cost of goods sold for May?

Describe how the inventories of manufacturers differ from the inventories of retailers.

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

Carrington Inc.manufactures digital cameras and has experienced noticeable declines in the purchase price of many of the components it uses,including memory components.Which inventory costing method should Carrington use if it wants to maximize net income? Explain your answer.

Share,Inc. The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system. Refer to the data for Share,Inc. If the moving average method is used,how much is ending inventory on May 30?