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Exam 8: Inventories: Measurement

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Question 51

Multiple Choice

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In a periodic inventory system, the cost of inventories sold is:

A) Debited to accounts receivable.
B) Credited to cost of goods sold.
C) Debited to cost of goods sold.
D) Not recorded at the time of sale.

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

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Question 52

Multiple Choice

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Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

A) $492,500.
B) $496,500.
C) $490,500.
D) $492,550.

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

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Question 53

Multiple Choice

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The use of LIFO in accounting for a firm's inventory:

The ending inventory assuming FIFO is:

What is Nueva's net income if it elects LIFO?

The ending inventory assuming LIFO and a perpetual inventory system is:

In a perpetual average cost system:

The largest expense on a retailer's income statement is typically:

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses FIFO.

In a periodic inventory system, the cost of purchases is debited to:

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had a cost inventory of $600,000. Its inventory as of December 31, 2009, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2009?

The gross profit ratio is calculated by dividing gross profit by average inventory.

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

Using the gross method, purchase discounts lost are:

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had an inventory of $800,000. Its inventory as of December 31, 2009, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2009?

The following information comes from the 2007 Occidental Petroleum Corporation annual report to shareholders: NOTE 5 INVENTORIES Inventories of approximately $190 million and $204 million were valued under the LIFO method at December 31, 2007 and 2006, respectively. Inventories ($ in millions) were: Also, the footnote indicated that the LIFO reserve was $102 million and $74 million at the end of 2007 and 2006, respectively. The LIFO reserve indicates that inventories would have been $102 million and $74 million higher at the end of 2007 and 2006, respectively, if Occidental Petroleum had used FIFO to value its entire inventory. Required: If Occidental Petroleum had used FIFO to value its entire inventory how would its 2007 pre-tax income be affected? $\begin{array}{l}&2007&2006\\\text { Total }&\$910&\$825\end{array}$

Assuming CBC uses the gross method to record purchases, ending inventory would be:

Robertson Corporation's inventory balance was $22,000 at the beginning of the year and $20,000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio 40%. What were net sales for the year?

What is Nueva's net income if it elects FIFO?

The table below contains selected financial information from recent financial statements of KBI Toys, and Little Tikes Adventure Toys, Inc., two toy manufacturing companies ($ in thousands): Required: Calculate the gross profit ratio, the inventory turnover ratio, and the average days in inventory for the two companies, using the most recent fiscal year data.