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Exam 9: Inventories: Additional Issues

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Question 61

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In applying the lower of cost and net realizable value rule,the inventory of supplies would be valued at:

A) $45,000.
B) $54,000.
C) $41,000.
D) $60,000.

E) All of the above
F) A) and B)

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Question 62

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What should be the reported value of Sullivan's inventory if the company prepares its financial statements according to International Financial Reporting Standards (IFRS) ?

A) $500,000.
B) $440,000.
C) $470,000.
D) $490,000.

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

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Question 63

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Poppy Co.uses a periodic inventory system.Beginning inventory on January 1 was understated by $30,000,and its ending inventory on December 31 was understated by $17,000.In addition,a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase.None of these errors were discovered until the next year.As a result,Poppy's cost of goods sold for this year was:

Under the LIFO retail method,which of the following are not included in the denominator of the cost-to-retail conversion percentage?

Harley Inc.uses the conventional retail method to estimate its ending inventories.The following data has been summarized for December 31,2016: Required: Estimate the cost of ending inventory applying the conventional retail method.

Use the following to answer questions Novelli's Nursery has developed the following data for lower of cost and net realizable valuation for its products: The costs to sell are 10% of selling price. -Required: Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to classes of trees.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Inventory is valued at the lower of cost,net realizable value,and replacement cost.

Charleston Company has elected to use the dollar-value LIFO retail method to value its inventory.The following data has been accumulated from the accounting records: Required: Estimate the ending inventory for December 31,2016.

Briefly explain the financial reporting required when a company changes to or from the LIFO inventory method.

Briefly explain the differences between U.S.GAAP and International Financial Reporting Standards (IFRS)in the application of the lower of cost and net realizable value rule for valuing inventory.

The average cost-to-retail percentage is:

Haskell Corporation has determined its year-end inventory on a FIFO basis to be $785,000.Information pertaining to that inventory is as follows: What should be the reported value of Haskell's inventory if the company prepares its Financial statements according to International Financial Reporting Standards (IFRS) ?

California Inc. ,through no fault of its own,lost an entire plant due to an earthquake on May 1,2016.In preparing its insurance claim on the inventory loss,the company developed the following data: Inventory January 1,2016,$300,000;sales and purchases from January 1,2016,to May 1,2016,$1,300,000 and $875,000,respectively.California consistently reports a 40% gross profit.The estimated inventory on May 1,2016,is:

Under International Financial Reporting Standards (IFRS) ,inventory is valued at the lower of cost and:

Purchase returns and purchase discounts are ignored when computing cost-to-retail ratios for the retail method.

When computing the cost-to-retail percentage for the average cost retail method,included in the denominator are:

Under the dollar-value LIFO retail method,to determine the value of a LIFO layer:

The gross profit method and retail method are both ways of estimating ending inventory.Briefly explain how the two methods differ.

In applying the lower of cost and net realizable value rule,the inventory of boots would be valued at: