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Exam 6: Inventory and Cost of Goods Sold

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Question 51

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Inventory records for Marvin Company revealed the following: Marvin sold 2,300 units of inventory during the month.Cost of goods sold assuming FIFO would be:

A) $16,800.
B) $16,760.
C) $16,540.
D) $16,660.

E) None of the above
F) All of the above

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Question 52

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If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2,which one of the following is true?

A) Net income is overstated in year 2.
B) Cost of goods sold is overstated in year 1.
C) Net income is understated in year 1.
D) Retained earnings is overstated in year 1.

E) C) and D)
F) None of the above

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Question 53

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LeGrand Corporation reported the following amounts in its income statement: What was LeGrand's operating income?

Inventory records for Marvin Company revealed the following: Marvin sold 2,300 units of inventory during the month.Cost of goods sold assuming LIFO would be:

Bill Inc.'s correct ending balance for the inventory account at the end of 2015 should be $5,000,but the company incorrectly stated it as $3,000.In 2016,Bill correctly recorded its ending balance of the inventory account.Which one of the following is true?

Income before income taxes equals operating income plus nonoperating revenues less nonoperating expenses.

Good,Inc.sold inventory for $1,200 that was purchased for $700.Good records which of the following when it sells inventory using a perpetual inventory system?

Which inventory cost flow assumption generally results in the highest reported amount for cost of goods sold when inventory costs are falling?

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Inventory costing method that assumes both cost of goods sold and ending inventory consist of a random mixture of all the goods available for sale.

What are the three primary cost flow assumptions? How does the specific identification method differ from these three primary cost flow assumptions?

When inventory costs are declining,__________ generally results in a lower amount of reported inventory.

A company reports the following amounts for 2015: Calculate cost of goods sold,the inventory turnover ratio,and the average days in inventory for 2015.

A company that has average inventory of $500 and cost of goods sold of $2,000 would have an inventory turnover ratio of 0.25.

For each company,calculate the missing amount.

Merchandise sold FOB destination indicates that:

Given the information below,what is the gross profit?

A company has the following transactions during March: March 3 Purchases inventory on account for $3,500,terms 2/10,n/30. March 5 Pays freight costs of $200 on inventory purchased on March 3. March 6 Returns inventory with a cost of $500. March 12 Pays the full amount due on March 3 purchase. March 29 Sells all inventory purchased on March 3 (less those returned on March 6)for $5,000 on account. Record all transactions,assuming the company uses a perpetual inventory system.

Using LIFO,the amount reported for ending inventory does not differ depending on whether a company uses a periodic system or a perpetual system.

During 2015,a company sells 500 units of inventory for $90 each.The company has the following inventory purchase transactions for 2015: Calculate cost of goods sold and ending inventory for 2015 assuming the company uses weighted-average cost with a periodic inventory system (round weighted-average unit cost to four decimals if necessary).

Generally,a higher inventory turnover ratio reflects positively on a company's ability to manage its inventory.