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Exam 6: Inventory Cost of Goods Sold

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Question 71

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ABC, Inc. began the year with $250,000 of inventory and purchased $1,500,000 of goods during the year. Sales for the year were $2,750,000 and the gross profit percentage is 45%. Compute the company's estimated cost of ending inventory by using the gross profit method. How can this estimate be checked for accuracy?

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The estimated endin...

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Question 72

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A widely used method for estimating the value of ending inventory is the:

A) periodic method.
B) perpetual method.
C) lower-of-cost-or-market method.
D) gross profit method.

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

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Question 73

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Ulra Company has sales revenue of $88,000, sales returns and allowances of $1,000, and sales discounts of $1,500. Ulra's net sales are:

The cost-of-goods sold model is:

Wendy Industries has the following information available for March: Calculate Wendy's ending inventory.

Company A purchased inventory for $100,000. In addition they had purchase returns of $7,000 and paid freight-in of $8,000.Company A's net purchases would be:

BMX Co. sells item XJ15 for $1,000 per unit, and has a cost of goods sold percentage of 80%. The gross profit to be found for selling 20 items:

Alberta Company has net purchases of $75,000, purchase returns of $7,000 and purchase discounts of $4,000. Alberta's gross purchases were:

Under the periodic inventory system, a physical inventory is taken to determine the cost of the inventory on hand and the cost of the merchandise sold.

Crazy Eddie "cooked the books" which ultimately led the company to go out of business. Which of the following is a correct statement about the frauds at Crazy Eddie?

A company will include goods they hold on consignment in their ending inventory.

Debit Company had sales of $550,000 and cost of goods sold of $300,000 during the year. Inventory was $45,000 at the beginning of the year and $55,000 at the end of the year. Required: 1. Compute the company's gross profit percentage and rate of inventory turnover for the year. 2. For the previous year, the gross profit percentage was 43.5% and inventory turnover was 6.5. Are these amounts improving or deteriorating?

Given the following data, calculate the cost of ending inventory using the FIFO costing method.

Under a perpetual inventory system, the journal entry to record the purchase of inventory will include a:

The specific unit cost method is used for inventory items that have common characteristics.

When a LIFO liquidation occurs:

ABC Auto Sales sells new Lexus vehicles. ABC will most likely use the ________ method to cost its ending inventory.

Debit Company's $2 million cost of inventory at the end of last year was overstated by $250,000. 1. What was the effect of this error on last year's reported total assets, gross profit, and net income? 2. What is the effect of this error on this year's reported total assets, gross profit, and net income? 3. What is the effect of this error on next year's reported total assets, gross profit, and net income?

The LIFO Reserve is the difference between the LIFO cost of an inventory and what the cost of that inventory would be under FIFO.

The following data was extracted from the records of Winsam Company: Winsam's most recent balance sheet showed ending inventory of $800. Which method was used for valuing inventory?