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Exam 7: Inventories

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Question 31

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If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

A) $15
B) $60
C) $75
D) $135

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

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Question 32

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Based on the following information, compute (a) Inventory turnover; (b) Average daily cost of merchandise sold using a 365 day year; and (c) Number of days' sales in inventory.

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(a) $ 195,640 ¸ (($20,500+18,6...

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Question 33

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Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

Using the lower of cost or market, what should the total inventory value be for the following items: Apply the lower-of-cost-or-market method to inventory as a whole.

Too much inventory on hand

Inventory controls start when the merchandise is shelved in the store area.

If ending inventory for the year is overstated, owner's equity reported on the balance sheet at the end of the year is understated.

One effect of carrying too much inventory is risk that customers will change their buying habits.

The following units of a particular item were available for sale during the year: The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

Unsold consigned merchandise should be included in the consignee's inventory.

The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The value of ending inventory using FIFO is:

The inventory costing method that reports the most current prices in ending inventory is

Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory cost at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Safeguarding inventory from damage or theft is a primary objective for the control of inventory. If you were running a clothing store, name three specific controls you would implement to guard inventory from theft.

Three identical units of Item Steele Plate are purchased during March, as shown below. Assume that one unit is sold on March 23 for $1,125. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

The inventory data for an item for November are: Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?