Docsity
Docsity
Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity

Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan

Guidelines and tips
Guidelines and tips
Sell on Docsity
Sell on Docsity
Docsity AI
Docsity AI
Log inSign up

Prepare for your exams

Study with the several resources on Docsity

Find documents

Prepare for your exams with the study notes shared by other students like you on Docsity

Search for your university

Find the specific documents for your university's exams

Docsity AINEW

Summarize your documents, ask them questions, convert them into quizzes and concept maps

Explore questions

Clear up your doubts by reading the answers to questions asked by your fellow students

Earn points to download

Earn points by helping other students or get them with a premium plan

Share documents
download point icon20 Points

For each uploaded document

Answer questions
download point icon5 Points

For each given answer (max 1 per day)

All the ways to get free points
Get points immediately

Choose a premium plan with all the points you need

Study Opportunities

Choose your next study program

Get in touch with the best universities in the world. Search through thousands of universities and official partners

Community

Ask the community

Ask the community for help and clear up your study doubts

Free resources

Our save-the-student-ebooks!

Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors

Inventory Costing Methods: Multiple Choice Exam Questions, Exams of Business

Business

Chapter 6 Question Review. 1. Chapter 6 Questions. Multiple Choice. 1. In a perpetual inventory system, a. LIFO cost of goods sold will be the same as in a ...

Typology: Exams

2021/2022

Uploaded on 08/05/2022

jacqueline_nel
jacqueline_nel ๐Ÿ‡ง๐Ÿ‡ช

4.4

(242)

3.2K documents

1 / 14

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
Chapter 6 Question Review 1
Chapter 6 Questions
Multiple Choice
1. In a perpetual inventory system,
a. LIFO cost of goods sold will be the same as in a periodic inventory system.
b. average costs are based entirely on unit cost simple averages.
c. a new average is computed under the average cost method after each sale.
d. FIFO cost of goods sold will be the same as in a periodic inventory system.
2. Company Y has the following inventory data:
August 1 Beginning inventory 20 units at $10
8 Purchases 130 units at $15
17 Sale 80 units
25 Purchases 30 units at $20
30 Sale 60 units
Assuming that a perpetual inventory system is used, what is ending inventory (rounded) under the
average cost method for August? (DO NOT ROUND INTERMEDIATE CALCULATIONS).
a. $641.33
b. $611.11
c. $800.00
d. $500.00
3. Simpson Inc. purchased inventory as follows:
Jan. 5 500 units at $10.00
Jan. 15 1,000 units at $15.00
Jan. 25 200 units at $20.00
What is the average unit cost of inventory?
a. $14.12
b. $15.00
c. $13.00
d. $15.83
4. Delightful Discs has the following inventory data:
Nov. 1 Inventory 30 units @ $6.00 each
8 Purchase 120 units @ $6.45 each
17 Purchase 60 units @ $6.30 each
25 Purchase 90 units @ $6.60 each
A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.
Ending inventory under LIFO periodic inventory system is
a. $657
b. $632
c. $1,269
d. $1,295
pf3
pf4
pf5
pf8
pf9
pfa
pfd
pfe

Partial preview of the text

Download Inventory Costing Methods: Multiple Choice Exam Questions and more Exams Business in PDF only on Docsity!

Chapter 6 Questions

Multiple Choice

  1. In a perpetual inventory system, a. LIFO cost of goods sold will be the same as in a periodic inventory system. b. average costs are based entirely on unit cost simple averages. c. a new average is computed under the average cost method after each sale. d. FIFO cost of goods sold will be the same as in a periodic inventory system.
  2. Company Y has the following inventory data: August 1 Beginning inventory 20 units at $ 10 8 Purchases 13 0 units at $ 15 17 Sale 80 units 25 Purchases 30 units at $ 20 30 Sale 60 units Assuming that a perpetual inventory system is used, what is ending inventory (rounded) under the average cost method for August? (DO NOT ROUND INTERMEDIATE CALCULATIONS). a. $641. b. $611. c. $800. d. $500.
  3. Simpson Inc. purchased inventory as follows: Jan. 5 500 units at $10. Jan. 15 1,000 units at $15. Jan. 25 200 units at $20. What is the average unit cost of inventory? a. $14. b. $15. c. $13. d. $15.
  4. Delightful Discs has the following inventory data: Nov. 1 Inventory 30 units @ $6.00 each 8 Purchase 120 units @ $6.45 each 17 Purchase 60 units @ $6.30 each 25 Purchase 90 units @ $6.60 each A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under LIFO periodic inventory system is a. $ b. $ c. $1, d. $1,
  1. Hardaway Inc. purchased inventory as follows: Jan. 10 200 units at $5. Jan. 20 500 units at $10. Jan. 30 800 units at $15. Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31. Assuming the specific identification method is used and ending inventory consists of 100 units from the Jan. 10 purchase, 300 units from the Jan. 20 purchase, and 100 units from the Jan. 30 purchase, ending inventory would be a. $13, b. $4, c. $7, d. $5,
  2. Hardaway Inc. purchased inventory as follows: Jan. 10 200 units at $5. Jan. 20 500 units at $10. Jan. 30 800 units at $15. Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31. Assuming the specific identification method is used and ending inventory consists of 100 units from the Jan. 10 purchase, 300 units from the Jan. 20 purchase, and 100 units from the Jan. 30 purchase, cost of goods sold would be a. $13, b. $4, c. $7, d. $5,
  3. Baker Bakery Company just began business and made the following four inventory purchases in June: June 1 150 units $ 1, June 10 200 units 1, June 15 200 units 1, June 28 150 units 1, $5. A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the FIFO periodic inventory method, the amount allocated to ending inventory for June is a. $1, b. $1, c. $1, d. $1,
  1. Zimmerman Inc. uses a periodic inventory system. Details for the inventory account for the month of October are shown below: Assume that on October 31, there is 80 units on hand. If the company uses LIFO, what is the value of cost of goods sold for October? a. $1, b. $1, c. $1, d. $1,
  2. Nelson Corporation sells three different products. The following information is available on December 31: Inventory Item Units Cost per unit Market value per unit X 300 $4.00 $3. Y 600 $2.00 $1. Z 1,500 $3.00 $4. When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be? a. $6, b. $6, c. $7, d. $6,
  3. Inventory costing methods place primary reliance on assumptions about the flow of a. goods. b. costs. c. resale prices. d. values.
  1. 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. Date Blankets Units Cost May 3 Purchase 5 $ 10 Sale 3 17 Purchase 10 $ 20 Sale 6 23 Sale 3 30 Purchase 10 $ Assuming that the company uses the perpetual inventory system, determine the COST OF GOODS SOLD for the month of May using the LIFO inventory cost method. a. $ 364 b. $ 300 c. $ 268 d. $ 276
  1. The Cain Company has just completed a physical inventory count at year end, December 31, 2017. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $80,000. During the audit, the independent CPA discovered the following additional information: (a) There were goods in transit on December 31, 2017, from a supplier with terms FOB destination, costing $10,000. Because the goods had not arrived, they were excluded from the physical inventory count. (b) On December 27, 2017, a regular customer purchased goods for cash amounting to $1,000 and had them shipped to a bonded warehouse for temporary storage on December 28, 2017. The goods were shipped via common carrier with terms FOB shipping point. The customer picked the goods up from the warehouse on January 4, 2018. Cain Company had paid $500 for the goods and, because they were in storage, Cain included them in the physical inventory count. (c) Cain Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost of $4,000, had been delivered to the transportation company on December 28, 2017; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2017, it was excluded from the physical inventory. (d) On December 31, 2017, there were goods in transit to customers, with terms FOB shipping point, amounting to $800 (expected delivery on January 8, 2018). Because the goods had been shipped, they were excluded from the physical inventory count. (e) On December 31, 2017, Cain Company shipped $2,500 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2017. Because the goods were not on hand, they were not included in the physical inventory count. (f) Cain Company, as the consignee, had goods on consignment that cost $3,000. Because these goods were on hand as of December 31, 2017, they were included in the physical inventory count. Instructions Analyze the above information and calculate a corrected amount for the ending inventory. Explain the basis for your treatment of each item.
  1. Wolf Camera Shop Inc. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Market Units Cost/Unit Value/Unit Cameras Minolta 5 $175 $ Canon 7 148 152 Light Meters Vivitar 15 125 119 Kodak 10 120 135 Instructions What amount should be reported on Wolf Camera Shop's financial statements, assuming the lower-of- cost-or-market rule is applied?
  2. Match the items below by entering the appropriate code letter in the space provided. A. Merchandise Inventory F. First-in, first-out (FIFO) method B. Work in process G. Last-in, first-out (LIFO) method C. FOB shipping point H. Average cost method D. FOB destination I. LIFO reserve E. Specific identification method J. Inventory turnover ratio ___ 1. The difference between inventory reported using LIFO and inventory using FIFO. ___ 2. Tracks the actual physical flow for each inventory item available for sale. ___ 3. Goods that are only partially completed in a manufacturing company. ___ 4. Cost of goods sold consists of the most recent inventory purchases. ___ 5. Goods ready for sale to customers by retailers and wholesalers. ___ 6. Title to the goods transfers when the public carrier accepts the goods from the seller. ___ 7. Ending inventory valuation consists of the most recent inventory purchases. ___ 8. The same unit cost is used to value ending inventory and cost of goods sold. ___ 9. Title to goods transfers when the goods are delivered to the buyer. ___ 10. Measures the number of times the inventory sold during the period.

Chapter 6 Solutions

Multiple Choice Solutions

1. D

2. A

3. A

4. B

5. C

6. A

7. C

8. A

9. D

10. D

11. A

12. C

13. B

14. B

15. D

Chapter 6 Solutions (Cont.)

Exercise Solutions (Cont.)

  1. (Cont.)

Start with $80, Item (a) โ€“ (Because the goods were shipped FOB destination title will pass to Cain upon arrival. Properly excluded.) Item (b) โ€“ 500 (Goods should be excluded. The customer accepted title when the goods left Cain FOB shipping point.) Item (c) + 4,000 (Goods belong to Cain. Title passed when supplier delivered the goods to the transportation company.) Item (d) โ€“ (Because the goods were shipped FOB shipping point Cain no longer has title to these goods. Properly excluded.) Item (e) + 2,500 (Goods were shipped FOB destination. Cain retains title until the customer receives them.) Item (f) โ€“ 3,000 (These goods are owned by the consignor, not the consignee, and should not be included in Cain's inventory.) Corrected inventory $83,

Chapter 6 Solutions (Cont.)

Exercise Solutions (Cont.)

A. 600 units in ending inventory. Under FIFO, the units remaining in inventory are the ones purchased most recently. 1/24 200 units @ $13.20 = $2,640 (1/24 units ร— 1/24 cost) 1/16 400 units @ $12.80 = 5,120 ((1/31 units โˆ’ 1/24 units) ร— 1/16 cost) 600 units $7, B. 600 units in ending inventory. Under average cost method, the weighted-average cost per unit must be computed. $25,040 รท 2,000 units = $12. 600 units x $12.52 = $7,512 (Tot. cost/tot. units) ร— end. inv. units C. 600 units in ending inventory. Under LIFO, the units remaining are the ones purchased earliest. 1/1 400 units @ 12.00 = $4,800 1/1 units ร— 1/1 cost 1/8 200 units @ 12.40 = 2,480 ((1/31 units โˆ’ 1/1 units) ร— 1/8 cost) 600 units $7,

Market Lower-of-Cost- Lower-of-Cost- Cost/Unit Value/Unit or-Market Units or-Market Cameras: Minolta $175 $168 $168 5 $ 840 Canon 148 152 148 7 1, Light Meters: Vivitar 125 119 119 15 1, Kodak 120 135 120 10 1, Total $4,

5. Answers to Matching

1. I 6. C

2. E 7. F

3. B 8. H

4. G 9. D

5. A 10. J