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The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows:
 

	Per Unit
Product	Cost			Selling Price
A	$	140		$	160
B		180			200
C		140			180
D		100			150
E		60			80

Costs to sell consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost.
 
Required:
What unit value should Royal Decking use for each of its products when applying the lower of cost or net realizable value
(LCNRV) rule to units of ending inventory?
 

   
Herman Company has three products in its ending inventory.
Specific per unit data at the end of the year for each of the products are as follows:
 

	Product 1				Product 2				Product 3
Cost	$	40			$	110			$	70
Selling price		100				180				130
Costs to sell		6				80				30

Required:
What unit values should Herman use for each of its products when applying the lower of cost or net realizable value
(LCNRV) rule to ending inventory?
 

   
Anthony Thomas Candies (ATC) reported the following financial data for 2021 and 2020:
 

	2021				2020
Sales	$	314,000			$	290,000
Sales returns and allowances		7,300				5,000
Net sales	$	306,700			$	285,000
Cost of goods sold:
Inventory, January 1		58,000				18,000
Net purchases		151,000				143,000
Goods available for sale		209,000				161,000
Inventory, December 31		71,000				58,000
Cost of goods sold		138,000				103,000
Gross profit	$	168,700			$	182,000

 
ATC's gross profit ratio (rounded) in 2021 is:
(Round your answer to one decimal place e.g., 0.123 as 12.3%.)

55%
   
Fulbright Corp. uses the periodic inventory system. During its first year of operations,
Fulbright made the following purchases (listed in chronological order of acquisition):
 
44 units at $105 per unit
71 units at $80 per unit
171 units at $59 per unit
 
Sales for the year totaled 268 units, leaving 18 units on hand at the end of the year.
Ending inventory using the average cost method is:
(Do not round unit cost calculation. Round your final answer to the nearest whole dollar amount.)

$1283
   
The inventory method that will always produce the same amount for cost of goods sold in a periodic
inventory system as in a perpetual inventory system would be:

FIFO
   
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 per unit
70 units at $80 per unit
170 units at $60 per unit
 
Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.
Ending inventory using the average cost method (rounded) is:

$707.00
   
Which of the following is false regarding the FIFO inventory method?

FIFO under a perpetual inventory system results in the same cost of goods sold as FIFO under a periodic inventory system.
A company can choose to account for the flow of inventory using the FIFO method even if this doesn’t match the actual flow of its inventory. Perishable goods often follow an actual physical flow that is consistent with the FIFO method assumptions.

All of the other answer choices are true.
   
The primary reason for the popularity of LIFO is that it:

Saves income taxes currently.
   
During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:
 
Lower under average cost than LIFO.
   
On December 28, 2021, Videotech Corporation (VTC) purchased 10 units of a new satellite uplink system from
Tristar Communications for $23,000 each.

The terms of each sale were 2/10, n/30. VTC uses the gross method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2022.
 
Prepare the journal entries on December 28 and January 6 to record the purchase and payment.
(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
 

   
King Supply maintains its internal inventory records using perpetual FIFO, but for financial reporting purposes,
reports ending inventory and cost of goods sold using periodic LIFO. At the beginning of the year,
the company had a balance of $24,000 in its LIFO reserve account. By the end of the year,
internal records reveal that FIFO ending inventory is $50,000 greater than LIFO ending inventory.

Record the year-end adjusting entry for the LIFO reserve. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account field.)
 

   
Walgreens Boots Alliance, Inc., reported inventories of $2,310 million and $2,422 million in its August 31, 2017,
and August 31, 2016, balance sheets, respectively. Cost of goods sold for the year ended August 31, 2017, was $30,084 million.
The company uses primarily the LIFO inventory method. A disclosure note reported that if FIFO had been used instead of LIFO,
inventory would have been higher by $298 million and $272 million at the end of the August 31, 2017, and August 31, 2016, periods, respectively.
 
Calculate cost of goods sold for the year ended August 31, 2017, assuming Walgreens used FIFO instead of LIFO.
(Enter your answer in millions.)
 
Cold Of Goods Sold: $30,058 (million)
 
272 + 30,084 - 298
   
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 per unit
    70 units at $80 per unit
    170 units at $60 per unit
 
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:
 
$          (400)
 
Cost of goods sold is given by:

Net Purchases + beginning inventory − ending inventory.
   
CMN Inc. uses LIFO and has experienced increasing costs since its founding. CMN disclosed that the LIFO reserve
(also known as the LIFO allowance) at the end of 2021 was $3 million.
The balance sheet showed ending inventory of $17 million at the end of 2021.
What would the ending inventory have been if CMN had always used FIFO?

$20 million.

FIFO inventory = LIFO inventory + LIFO reserve
17 + 3 = 20
   
FIFO periodic and FIFO perpetual always produce the same dollar amounts for cost of goods sold.

True
   
A company purchases inventory for $10,000, with terms 3/10, n/30.
The company uses a perpetual system and the net method to record purchases.
To record this transaction, the company debits the Inventory account for $9,970.
Which of the following statements is correct?

The recorded amount should instead be $9,700.
   
In a perpetual inventory system, the cost of inventory sold is:

Debited to cost of goods sold.
   
When reported in financial statements, a LIFO allowance account usually:

Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis.
   
In a perpetual inventory system, which of the following is recorded at the time of the sale?

Both sales revenue and cost of goods sold.
   
Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021:
 

Aug.1	Inventory on hand—3,800 units; cost $7.10 each.
8	Purchased 19,000 units for $7.30 each.
14	Sold 15,200 units for $13.80 each.
18	Purchased 11,400 units for $7.40 each.
25	Sold 14,200 units for $12.80 each.
28	Purchased 5,800 units for $5.80 each.
31	Inventory on hand—10,600 units.

 
Required:
Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2021, balance sheet and the cost of goods sold it would report in its August 2021 income statement using each of the following cost flow methods.
 


   
On September 22, 2021, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the
Rocklin Sporting Goods Company.

The following information is available from the records of the company’s periodic inventory system:
 

Inventory, January 1, 2021	$	149,000
Net purchases, January 1 through September 22		379,000
Net sales, January 1 through September 22		595,000
Gross profit ratio		25	%

Required:
Complete the below table to estimate the cost of inventory destroyed in the flood using the gross profit method.
 

   
Thompson TV and Appliance reported the following in its 2021 financial statements:
 

	2021
Sales	$	432,000
Cost of goods sold:
Inventory, January 1		75,000
Net purchases		330,000
Goods available for sale		405,000
Inventory, December 31		91,000
Cost of goods sold		314,000
Gross profit	$	118,000

 
Thompson's 2021 gross profit ratio is:
(Round your answer to the nearest whole percentage.)
27%
   
Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17,
and received an invoice with a list price amount of $5,200 and payment terms of 3/10, n/30.
Alison uses the net method to record purchases.
Alison should record the purchase at:

$5044
   
A company began its fiscal year with inventory of $190,000.
Purchases and cost of goods sold for the year were $949,000 and $983,000, respectively.
What was the amount of ending inventory?
 
$156,000
   
Selected financial statement data for Schmitzer Inc. is shown below:
 

	2021		2020
Balance sheet:
Inventories	61,000		49,000
Ratios:
Gross profit ratio for 2021	45	%
Inventory turnover ratio for 20,21	4

 
What was the amount of net sales for 2021?

$400,000
   
Thompson TV and Appliance reported the following in its 2021 financial statements:
 

	2021
Sales	$	420,000
Cost of goods sold:
Inventory, January 1		82,000
Net purchases		340,000
Goods available for sale		422,000
Inventory, December 31		86,000
Cost of goods sold		336,000
Gross profit	$	84,000

Thompson's 2021 gross profit ratio is:

20%
   
LIFO usually provides a better match of revenue and expense than does FIFO.

True
   
In periods when costs are rising, LIFO liquidations:

Distort the net income.
   
Physical counts of inventory are never made with perpetual inventory systems.

False
   
Dollar-value LIFO eliminates the risk of LIFO liquidations.

False