Question : 140.When costs to purchase inventory regularly decline, which method of : 1258835

 

 

140.When costs to purchase inventory regularly decline, which method of inventory costing will yield the lowest cost of goods sold?   

A.FIFO.

 

B.LIFO.

 

C.Weighted average.

 

D.Specific identification.

 

E.Gross margin.

 

 

 

 

141.IFRS reporting currently does not allow which method of inventory costing?   

A.Specific identification.

 

B.FIFO.

 

C.LIFO.

 

D.Weighted average.

 

E.Lower of cost or market.

 

 

 

 

142.All of the following statements regarding U.S. GAAP and IFRS are true except:   

A.Both U.S. GAAP and IFRS include broad and similar guidance for the items and costs making up merchandise inventory.

 

B.For both U.S. GAAP and IFRS, merchandise inventory includes all items that a company owns and holds for sale.

 

C.Both U.S. GAAP and IFRS require companies to write down inventory when its value falls below the cost presently recorded.

 

D.Both U.S. GAAP and IFRS allow reversals of write downs up to the original acquisition cost.

 

E.With limited exceptions, neither U.S. GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

 

 

 

 

143.Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee’s location. How many units should Sandoval include in its year-end inventory?   

A.29,000

 

B.21,000

 

C.23,000

 

D.19,000

 

E.26,000

20,000 – 3,000 + 2,000 + 4,000 = 23,000

 

 

 

144.Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO. 

DateActivitiesUnits Acquired at CostUnits Sold at Retail

May 1Beginning Inventory150 units @ $10.00

5Purchase220 units @ $12.00

10Sales140 units @ $20.00

15Purchase100 units @ $13.00

24Sales150 units @ $21.00

  

A.$2,260

 

B.$3,180

 

C.$1,860

 

D.$3,580

 

E.$2,100

(80 * $12 = $960) + (100 * $13 = $1,300) = $2,260

 

 

 

145.Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO. 

DateActivitiesUnits Acquired at CostUnits Sold at Retail

May 1Beginning Inventory150 units @ $10.00

5Purchase220 units @ $12.00

10Sales140 units @ $20.00

15Purchase100 units @ $13.00

24Sales150 units @ $21.00

  

A.$2,260

 

B.$3,180

 

C.$1,860

 

D.$3,580

 

E.$2,100

(140 * $10 = $1,400) + [(10 * $10 = $100) + (140 * $12 = $1,680)] = $3,180

 

 

 

146.Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO. 

DateActivitiesUnits Acquired at CostUnits Sold at Retail

May 1Beginning Inventory150 units @ $10.00

5Purchase220 units @ $12.00

10Sales140 units @ $20.00

15Purchase100 units @ $13.00

24Sales150 units @ $21.00

  

A.$2,260

 

B.$3,180

 

C.$1,860

 

D.$3,580

 

E.$2,100

(150 * $10 = $1,500) + (30 * $12 = $360) = $1,860

 

 

 

147.Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO. 

DateActivitiesUnits Acquired at CostUnits Sold at Retail

May 1Beginning Inventory150 units @ $10.00

5Purchase220 units @ $12.00

10Sales140 units @ $20.00

15Purchase100 units @ $13.00

24Sales150 units @ $21.00

  

A.$2,260

 

B.$3,180

 

C.$1,860

 

D.$3,580

 

E.$2,100

(140 * $12 = $1,680) + [(100 * $13 = $1,300) + (50 * $12 = $600)] = $3,580

 

 

 

148.On September 1 of the current year, Scots Company experienced a flood that destroyed the company’s entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $215,450. Inventory purchased during August was $192,530. Sales for the month of August were $542,500. Assuming the company’s typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.    

A.$87,480

 

B.$134,520

 

C.$109,980

 

D.$82,480

 

E.$81,480

 

Merchandise available for sale—$215,450 + $192,530 = $407,980

Estimate cost of goods sold—$542,500 * .6 = $325,500

Estimated ending inventory—$407,980 – $325,500 = $82,480

 

 

 

 

149.Use the following information for Shafer Company to compute inventory turnover for 2015. 

20152014

Net sales$647,500$582,000

Cost of goods sold389,500360,840

Ending inventory76,70079,380

  

A.9.98

 

B.5.08

 

C.4.99

 

D.8.30

 

E.8.44

Inventory Turnover = Cost of Goods Sold/Average InventoryInventory Turnover = $389,500/[($76,700 + $79,380)/2]Inventory Turnover = $389,500/$78,040 = 4.99

 

 

 

 

150.Use the following information for Davis Company to compute inventory turnover for 2015. 

20152014

Cost of goods sold279,500291,800

Ending inventory47,70049,350

  

A.5.86

 

B.5.76

 

C.5.67

 

D.11.77

 

E.5.89

Inventory Turnover = Cost of Goods Sold/Average InventoryInventory Turnover = $279,500/[($47,700 + $49,350)/2]Inventory Turnover = $279,500/$48,525 = 5.76

 

 

 

151.Use the following information for Ephron Company to compute days’ sales in inventory for 2015. 

20152014

Net sales$547,500$572,000

Cost of goods sold348,500370,840

Ending inventory75,70081,400

  

A.52.4

 

B.82.3

 

C.50.5

 

D.76.8

 

E.79.3

Days’ Sales in Inventory = Ending Inventory/Cost of Goods Sold * 365Days’ Sales in Inventory = $75,700/$348,500 * 365 = 79.3