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Exam 8: Inventories: Measurement

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Question 81

Multiple Choice

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Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 -The ending inventory assuming FIFO is:

A) $5,140.
B) $5,080.
C) $5,060.
D) $5,050.

E) A) and B)
F) C) and D)

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Question 82

Multiple Choice

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Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -FIFO

A) Most recent purchases will be included in ending inventory.
B) 1 - (Cost of goods sold Net sales) .
C) Purchase discounts not taken are included in inventory.
D) Products that are not yet complete.
E) Purchase discounts not taken are considered interest expense.

F) B) and C)
G) C) and D)

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Question 83

Multiple Choice

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Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Perpetual inventory system

LIFO liquidation profits occur when inventory quantity declines and costs are rising.

The choice of cost flow assumption (FIFO, LIFO, or average) does not depend on the actual physical flow of the product.

Thompson TV and Appliance reported the following in its 2018 financial statements: -Thompson's 2018 inventory turnover ratio is:

Selected financial statement data from Western Colorado Stores is shown below. Required: 1. Compute the gross profit ratio for 2018. 2. Compute the inventory turnover ratio for 2018.

Costs and prices regularly fall every year in the microcomputer industry. Briefly indicate your recommendation and rationale for an inventory method for a firm about to enter this industry.

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Cost of goods sold

LIFO usually provides a better match of revenue and expense than does FIFO.

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2018. Missing information has been left blank. Required: Compute the missing amounts. -

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition) : 40 units at $100 70 units at $80 170 units at $60 Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year. - In comparing the ending inventory balances of FIFO and LIFO, the ending inventory value under FIFO less the ending inventory balance under LIFO results in a difference of:

During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:

Patty's Pet Store purchased merchandise on October 10, 2018, at a price of $35,000, subject to credit terms of 2/10, n/30. Patty's uses the gross method for recording purchases and uses perpetual inventory system. Required: 1. Prepare the journal entry to record the purchase. 2. Prepare the journal entry to record the payment of one-half the invoice amount on October 18, 2018. 3. Prepare the journal entry to record the payment of the balance of the amount due on November 8, 2018.

A company that prepares its financial statements according to International Financial Reporting Standards (IFRS) can use all of the same inventory valuation methods as a company that prepares its statements under U.S. GAAP.

Nueva Company reported the following pretax data for its first year of operations. -What is Nueva's net income if it elects FIFO?

Nu Company reported the following pretax data for its first year of operations. -What is Nu's net income if it elects LIFO?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -LIFO liquidation

Ending inventory is equal to the cost of items on hand plus:

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -F.o.b. destination