FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers: $\begin{array}{clrr}\text { Date }&\text { Transaction } &\text { Number of Units }&\text { Cost per Unit }\\\hline1 / 1 & \text { Beginning Inventory } & 100 & \$ 800 \\5 / 5 & \text { Purchase } & 200 & \$ 900 \\8 / 10 & \text { Purchase } & 300 & \$ 1,000 \\10 / 15 & \text { Purchase } & 200 & \$ 1,100\end{array}$ During the year, Lauer sold 750 laptop computers. What was cost of goods sold using the LIFO cost flow assumption?

A) $725,000.
B) $740,000.
C) $735,000.
D) $720,000.

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following costs is not included as inventory on the balance sheet?

A) Raw materials to be used in the manufacturing process.
B) Work in process.
C) Finished goods.
D) Freight-out costs for finished goods sent to retailers.

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Which of the following statements is correct with respect to the determination of cash flows from operating activities?

The lower of cost or market (LCM) rule is used due to the conservatism constraint, and therefore an inventory calculation may result in a departure from the historical cost principle.

Which of the following statements is incorrect for a manufacturing entity?

Required: A. Compute the missing amounts in the income statement under three different inventory costing methods: (Ignore income taxes.) B. Explain the results of the weighted-average inventory costing method compared to the FIFO and LIFO costing methods during a period of increasing unit costs.

The records of Atlantis Company reflected the following for the month of February: $\begin{array} { l l c c } \text { Date } &{ \text { Transaction } } & \text { Number of Units } & \text { Unit Cost } \\2 / 1 & \text { Beginning inventory } & 600 & \$ 3 \\2 / 2 & \text { Purchase No.1 } & 500 & \$ 4 \\2 / 5 & \text { Sale No. 1 } & 700 & \\2 / 12 & \text { Purchase No. 2 } & 600 & \$ 5 \\2 / 15 & \text { Sale No. 2 } & 700 & \\2 / 23 & \text { Purchase No. 3 } & 900 & \$ 6 \\2 / 28 & \text { Ending inventory } & ? &\end{array}$ Required: Determine the amount of ending inventory and cost of goods sold using the following periodic system inventory costing methods:

Cassie Corporation has provided the following information for its most recent month of operation: sales $32,000, beginning inventory $8,000, purchases $16,000 and gross profit $20,000. How much was Cassie's ending inventory?

Which of the following is correct when, in the same year, beginning inventory is overstated by $1,300 and ending inventory is understated by $700?

Wilmington Company reported pretax income of $25,000 during 2013 and $30,000 during 2014. Later it was discovered that the ending inventory for 2013 was understated by $2,000 (and not corrected in 2013) . What is the correct pretax income for each year? $\begin{array}{lll}&2013&2014\\\text { A. } & \$ 23,000 & \$ 32,000 \\\text { B. } & \$ 27,000 & \$ 32,000 \\\text { C. } & \$ 27,000 & \$ 28,000 \\\text { D. } & \$ 23,000 & \$ 28,000\end{array}$

QV-TV, Inc. provided the following items in its notes to the financial statements for the year-end 2014: Cost of goods sold was $22 billion under FIFO costing and the inventory value under FIFO costing was $2.1 billion. The LIFO Reserve for year-end 2013 was $0.6 billion and at year-end 2014 it had increased to $0.8 billion. What is the LIFO inventory value at year-end 2014?

On December 31, 2014, Cruise Company has 10,000 units of an inventory item, which cost $40 per unit when purchased on June 15, 2014. The selling price was $60 per unit. On December 30, 2014, the replacement cost was $36 per unit. At what amount should the 10,000 units of inventory be reported at on the December 31, 2014 balance sheet?

Which of the following statements does not accurately describe the effects of a write-down of inventory on December 31, 2014 using the lower of cost or market (LCM) valuation method?

During periods of decreasing unit costs, use of the LIFO inventory method will result in a higher amount of ending inventory than will the use of the FIFO inventory method.

Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers: $\begin{array}{clrr}\text { Date }&\text { Transaction } &\text { Number of Units }&\text { Cost per Unit }\\\hline1 / 1 & \text { Beginning Inventory } & 100 & \$ 800 \\5 / 5 & \text { Purchase } & 200 & \$ 900 \\8 / 10 & \text { Purchase } & 300 & \$ 1,000 \\10 / 15 & \text { Purchase } & 200 & \$ 1,100\end{array}$ During the year, Lauer sold 750 laptop computers. What was cost of goods sold using the FIFO cost flow assumption?

A company using the periodic inventory system correctly recorded a purchase of merchandise, but the merchandise was not included in the physical inventory count at the end of the accounting period. The error caused which of the following?

Which of the following costs will not affect cost of goods sold?

Which of the following statements is incorrect when inventory unit costs are increasing?

Hopkins Company reported the following information related to inventory and sales: $\begin{array} { l l r } & \underline { \text { Units } } & \underline {\text { Unit Cost }} \\\text { Beginning inventory } & 1,000 & \$ 20 \\\text { Purchase No. } 1 & 7,000 & 22 \\\text { Purchase No. } 2 & 2,000 & 23\end{array}$ Sales-8,000 units at $35 per unit. Required: Compute the following amounts assuming a periodic inventory system:

An understatement of ending inventory results in an overstatement of net income.