Question 1

Your company had a beginning inventory of $109,500 and purchased $240,720 during the accounting period.Assuming no returns,find the goods available for sale,the cost of goods sold,the inventory turnover ratio,and days to sell for the company if its ending inventory was $94,820.

Accepted Answer

The answer of Your company had a beginning inventory of...

Question 2

An incorrect valuation of the ending inventory affects the balance sheet but not the income statement.
BT: Knowledge

Accepted Answer

An incorrect valuation of the ending inventory affects both the balance sheet and the income statement. It affects the balance sheet by incorrectly reporting the value of inventory and, consequently, the value of current assets and owner's equity. It affects the income statement by affecting the calculation of cost of goods sold and gross profit, which in turn impact net income.

Question 3

Match the term and the definition.Not all definitions will be used.
_____ weighted average cost.
_____ work in process inventory.
_____ days to sell.
_____ specific identification.
_____ goods available for sale.
_____ inventory.
_____ inventory turnover ratio.
_____ cost of goods sold equation.
A.The sum of beginning inventory and purchases by the company.
B.A company's policy of requiring identification by customers who pay by cheque.
C.The book value of all the partially produced goods held by a manufacturer.
D.Beginning inventory plus purchases minus ending inventory.
E.Tangible property held for future sale or used to produce other goods or services for sale.
F.The concept that relatively small amounts should be reported in the most cost effective way if they are too small to influence decisions.
G.The current market value of investment assets minus their original cost.
H.The average cost a company paid for inventory taking into account the number of units bought at each unit cost.
I.The average length of time it takes a company to sell an item in inventory.
J.An inventory costing method where the firm adds up all the different prices it paid for inventory and divides by the number of prices.
K.The average number of times a company sells its inventory over the year.
L.The amount of money that firms set aside today to buy inventory in the future.
M.An inventory costing method where the firm keeps track of the cost and sale of each individual good.

Accepted Answer

The answer of Match the term and the definition.Not all...

Question 4

A higher inventory turnover ratio is preferable to a lower one.
BT: Knowledge

Accepted Answer

A higher inventory turnover ratio indicates that a company is selling its products quickly and efficiently, which is generally seen as a positive indication of financial health. A lower inventory turnover ratio suggests that a company is either having difficulty selling its products or is carrying too much inventory, which can lead to increased costs and reduced profitability. Therefore, a higher inventory turnover ratio is preferable to a lower one.

Question 5

Fill in each blank with the appropriate term to complete each formula.
 $\begin{array}{lllll}
\text { BI } & \text { Beginning inventory } & \text { EI } & \text { Ending inventory P } & \text { Purchases } \
\text { CGS } & \text { Cost of Goods Sold } & \text { AI } & \text { Average inventory } &
\end{array}$ CGS}=______+_________-________
Average Inventory = (______+________)/2
Goods available for sale =______+______
Days to sell =365/(______/_____)

Accepted Answer

The answer of Fill in each blank with the appropriate...

Question 6

Match the term and the definition.Not all definitions will be used.
_____ raw materials inventory.
_____ FIFO.
_____ inventory write-down.
_____ merchandiser.
_____ inventory turnover ratio.
_____ lower of cost or market.
_____ manufacturer.
_____ finished goods inventory.
_____ LIFO.
A.Inventory that reflects goods currently under production.
B.The concept that a company needs to report amounts separately only if large enough to affect decisions.
C.A company that buys raw materials and produces goods for sale to others.
D.Also known as least cost measure,it is the concept that firms should use the lowest unit cost of those in inventory to evaluate the rest.
E.When the company reduces the book value of inventory that has declined in market value.
F.The percentage of a company's total inventory that is in raw materials inventory.
G.The interest a company loses when it holds goods in inventory.
H.The concept that a company should report inventory at either its cost or its current market value,whichever is less.
I.A company that buys finished goods from other companies and sells them to others.
J.An inventory costing method that assumes the goods sold were the oldest in inventory.
K.An analysis of the change in storage costs for inventory.
L.When a company does not immediately report a known loss but waits until a period with high revenues to report it.
M.An inventory costing method that assumes the goods sold were the newest in inventory.
N.A company's stockpile of inputs to be used to manufacture goods.
O.A manufacturer's stockpile of goods that is ready to be sold.
P.A tool for analyzing the frequency with which inventory rises and falls as a business buys and sells goods.

Accepted Answer

The answer of Match the term and the definition.Not all...

Question 7

A new textbook is published in the spring of 2009.Your campus bookstore buys 400 copies at $70 each in June,an additional 1,000 copies in August at $72 each,and 600 copies in December at $75 each.At the end of December 2009,the bookstore has sold 1,900 copies of the text.
Find the cost of goods sold and the cost of ending inventory:
a)under the weighted average cost method.
b)under the FIFO method.
c)under the LIFO method.
Using your calculations as a guide,explain how different inventory costing methods affect the numerator and denominator of the inventory turnover ratio when unit costs are increasing.Conclude your explanation by identifying the method that produces the highest (and lowest)inventory turnover ratio.

Accepted Answer

The answer of A new textbook is published in the...

Question 8

A company has beginning inventory of $128,400 and an ending inventory of $89,100.The company purchased $67,900 during the accounting period.Assuming no returns,calculate the goods available for sale and the cost of goods sold.

Accepted Answer

The answer of A company has beginning inventory of $128,400...

Question 9

The following company buys and sells identical collectors' coin sets.The company uses LIFO.Each coin set is identified by its letter and its cost in the first two columns below.Column 3 indicates when coin sets were sold.
For each inventory costing method given below,fill in the blanks to indicate the letter of the coin set which will be used to calculate either cost of goods sold or the cost of ending inventory.
PERIODIC INVENTORY: Inventory is taken on December 31,2009.
Cost of Goods Sold = _____ + _____ + _____ + _____ + _____
Ending inventory = _____ + _____ + _____
PERPETUAL INVENTORY
Cost of Goods Sold = _____ + _____ + _____ + _____ + _____
Ending inventory = _____ + _____ + _____

Accepted Answer

The answer of The following company buys and sells identical...

Question 10

Fill in the blanks below to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of merchandise is decreasing.
 $\begin{array}{lr}&\text { FIFO }&\text { LIFO }\
\text {Cost of Goods Sold  }&\_\_\_\_&\_\_\_\_\
\text { Ending inventory}&\_\_\_\_&\_\_\_\_\
\text { Net Income }&\_\_\_\_&\_\_\_\_\
\text { Inventory Turnover }&\_\_\_\_&\_\_\_\_\
\text { Days to sell }&\_\_\_\_&\_\_\_\_\
\end{array}$

Accepted Answer

The answer of Fill in the blanks below to indicate...

Question 11

Last year bell-bottom jeans were fashionable and this year boot-cut jeans are.A retail company's inventory has 375 bell-bottom jeans that cost $17 each and could be replaced for $15.The inventory also includes 1,000 boot-cut jeans that cost $16 each and could be replaced for $19.Explain why this situation requires an adjustment to the accounting records,prepare the journal entry that would be used to make the adjustment,and show the effects of the adjustment on the accounting equation.

Accepted Answer

The answer of Last year bell-bottom jeans were fashionable and...

Question 12

Given the following information for Maynor Company in 2009,calculate the company's ending inventory,cost of goods sold and gross profit,using the following inventory costing methods,assuming the company uses the periodic system:
a)Weighted Average
b)FIFO
c)LIFO
d)Specific Identification.(The ending inventory consisted of 15 @ $66; 10 @ $70; and 5 @ $76.)
 $\begin{array}{lllll}2009&&\text { Units } & \text { Unit Cost } &\text { Total Cost }\
\hline \text { Jan 1 } & \text { Beginning Inventory } & 10 & \$ 60 & \$ 600 \
\text { Purchases } & & & & \
\text { March } 28 & \text { Purchase } & 20 & 66 & 1,320 \
\text { Aug } 22 & \text { Purchase } & 20 & 70 & 1,400 \
\text { Oct } 14 & \text { Purchase } & 25 & 76 & 1,900\\text { Goods Available for Sale }&&75&&\$5,220\\\hline
\text { Sales }&&&\text { Unit Sales Price }&\text { Revenue }\
\text { May 1 } & \text { Sales } & 25 & \$ 100 & \$ 2,500 \
\text { October 28 } & \text { Sales } & 20 & \$ 100 & \$ 2,000\\text { Total Revente }&&45&&\$4,500
\end{array}$

Accepted Answer

The answer of Given the following information for Maynor Company...

Question 13

The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used,which causes problems for financial statements users.
BT: Comprehension

Accepted Answer

Different cost flow assumptions, such as First-in-First-Out (FIFO) or Last-in-First-Out (LIFO), will result in different inventory valuations and will affect the inventory turnover ratio and days to sell measure. This can create problems for financial statement users trying to compare companies or make investment decisions.

Question 14

In making comparisons of financial statements,it is desirable to compare data calculated using the same inventory costing methods.
BT: Comprehension

Accepted Answer

Comparing data calculated using different inventory costing methods could result in inaccurate or misleading conclusions about a company's financial performance. Using the same costing method ensures consistency and validity in the comparison.

Quiz 7: Inventory and Cost of Goods Sold

Your company had a beginning inventory of $109,500 and purchased $240,720 during the accounting period.Assuming no returns,find the goods available for sale,the cost of goods sold,the inventory turnover ratio,and days to sell for the company if its ending inventory was $94,820.

An incorrect valuation of the ending inventory affects the balance sheet but not the income statement. BT: Knowledge

A higher inventory turnover ratio is preferable to a lower one. BT: Knowledge

A company has beginning inventory of $128,400 and an ending inventory of $89,100.The company purchased $67,900 during the accounting period.Assuming no returns,calculate the goods available for sale and the cost of goods sold.

The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used,which causes problems for financial statements users. BT: Comprehension

In making comparisons of financial statements,it is desirable to compare data calculated using the same inventory costing methods. BT: Comprehension