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Salmone Company reported the following purchases and sales of its only product. Salmone uses a
periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO.
 
Date                       Activities                              Units Acquired at Cost                    Units Sold at Retail
May 1                    Beginning Inventory        200 units                             @                            $15         
5                             Purchase                              245 units                             @                            $17         
10                           Sales                                      165 units                             @                            $25
15                           Purchase                              125 units                             @                            $18         
24                           Sales                                      115 units                             @                            $26
 
    $5,055
    $4,540
    $4,960
    $4,875
    $4,360
 
FIFO Perpetual Calculator
   
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
 
August 2              17 units were purchased at $8 per unit.
August 18            22 units were purchased at $10 per unit.
August 29            19 units were sold.
 
What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)
 
    $356.00
    $220.00
    $156.00
    $173.47
    $158.50
 
Average Cost Perpetual Calculator
   
A company has beginning inventory of 20 units at a cost of $12.00 each on October 1.
On October 5, it purchases 16 units at $13.00 per unit. On October 12 it purchases 26 units at $14.00 per unit.
On October 15, it sells 48 units. Using the FIFO periodic inventory method, what is the value of the inventory at October 15 after the sale?
 
October 1 beginning inventory of 20 units at a cost of $12.00
October 5, it purchases 16 units at $13.00
October 12 it purchases 26 units at $14.00
October 15, it sells 48 units.
 
Using the FIFO periodic inventory method, what is the value of the inventory at October 15 after the sale
 
    $196.00
    $420.00
    $168.00
    $224.00
    $364.00
 
FIFO Periodic Calculator
   
Hull Company reported the following income statement information for the current year:
                                 
Sales                                                                      $             423,000                
Cost of goods sold:                                           
Beginning inventory                                        $                   151,500                
Cost of goods purchased                                                    286,000                
Cost of goods available for sale                                        437,500                
Ending inventory                                                                  157,000                
Cost of goods sold                                                              280,500                
Gross profit                                                         $               142,500                
 
The beginning inventory balance is correct. However, the ending inventory figure was overstated
by $33,000. Given this information, the correct gross profit would be:
 
    $118,500.
    $142,500.
    $175,500.
    $122,500.
    $109,500
 
gross profit – overstated
   
Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows:
 

	Year 1	Year 2
Beginning inventory	$ 126,000	$ 131,200
Cost of goods purchased	251,200	281,000
Cost of goods available for sale	377,200	412,200
Ending inventory	131,200	136,200
Cost of goods sold	$ 246,000	$ 276,000

                 
Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated
by $16,200 and 2) ending inventory at the end of Year 2 was overstated by $7,200.
Given this information, the correct cost of goods sold figure for Year 2 would be:
 
$268,800
$255,000
$299,400
$292,200
$283,200
 

Cost of goods sold in year 2	$276,000
Add: Opening inventory understated	$16,200
Add: Closing inventory overstated	$7,200
Cost of goods sold	$299,400

   
Salmone Company reported the following purchases and sales of its only product.
Salmone uses a periodic inventory system. Determine the cost assigned to ending inventory using LIFO.
 
Date                      Activities                              Units Acquired at Cost           Units Sold at Retail
May       1             Beginning Inventory        180 units                                              @ $13    
5             Purchase                                              235 units                                              @ $15    
10           Sales                                                      155 units                                              @ $23
15           Purchase                                              115 units                                              @ $16    
24           Sales                                                      105 units                                              @ $24
 
    $3,690
    $2,760
    $3,013
    $4,860
    $4,840
 
LIFO Periodic Calculator
   
Giorgio had cost of goods sold of $9,589 million, ending inventory of $2,257 million,
and average inventory of $2,133 million. Its inventory turnover equals:
 
    0.24.
    4.26.
    4.50.
    85.9 days
    81.2 days.
 
cost of goods sold / average inventory
   
On March 31 a company needed to estimate its ending inventory to prepare its first
quarter financial statements. The following information is available:
 
Beginning inventory, January 1: $5,100
Net sales:                            $51,000
Net purchases: $52,000
 
The company's gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would be:
 
    $43,350
    $6,100.
    $27,050.
    $5,100.
    $32,150
 
Cost of goods sold = Net sales - Gross margin
Cost of goods sold = 51000 - (51000 x .15)
Cost of goods sold = 51000 - 7650
43,350
   
A company had the following purchases and sales during its first year of operations:
 
                              Purchases                            Sales
January:               20 units at $170               12 units
February:            30 units at $175               14 units
May:    25 units at $180               18 units
September:        22 units at $185               17 units
November:         20 units at $190               22 units
 
On December 31, there were 34 units remaining in ending inventory. Using the Perpetual LIFO
inventory valuation method, what is the cost of the ending inventory?
(Assume all sales were made on the last day of the month.)
 
Multiple Choice
 
    $9,289.
    $5,975
    $8,275.
    $8,689.
    $12,575.
   
A company’s normal selling price for its product is $21 per unit. However, due to market
competition, the selling price has fallen to $16 per unit. This company's current inventory
consists of 190 units purchased at $17 per unit. Replacement cost has fallen to $14 per unit.
Calculate the value of this company's inventory at the lower of cost or market.
 
    $2,760.
    $2,610.
    $3,230.
    $2,660
    $3,040.
 
fallen cost x units
14 x 190 = 2,660
   
On March 31 a company needed to estimate its ending inventory to prepare its first quarter
financial statements. The following information is available:
 
Beginning inventory, January 1:                                $4,600
Net sales:                                                                            $75,000
Net purchases:                                                  $73,000
 
The company's gross margin ratio is 30%. Using the gross profit method, the estimated ending inventory value would be:
 
    $52,500
    $77,600.
    $21,900.
    $25,100.
    $22,500.
 
Net sales x 1% - 30% = 75000 x .7 = 52500
   
Grays Company has inventory of 18 units at a cost of $6 each on August 1.
On August 3, it purchased 28 units at $12 each. 20 units are sold on August 6.
Using the FIFO perpetual inventory method, what amount will be reported as cost of goods
sold for the 20 units that were sold?
 
    $360.
    $228.
    $132
    $138.
    $136.
   
Salmone Company reported the following purchases and sales of its only product.
Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.
 
Date       Activities              Units Acquired at Cost    Units Sold at Retail
 
May 1   Beginning Inventory       270 units @ $12                
5             Purchase                             280 units @ $14                
10           Sales                                      200 units @ $22
15           Purchase                             160 units @ $15                
24           Sales                                      150 units @ $23
 
Multiple Choice
 
    $4,840
    $5,200
    $4,360
    $4,510
    $5,050
   
Salmone Company reported the following purchases and sales of its only product.
Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.
 
Date       Activities              Units Acquired at Cost    Units Sold at Retail
 
May 1   Beginning Inventory       180 units @ $13                
5             Purchase             235 units @ $15                
10           Sales                      155 units @ $23
15           Purchase             115 units @ $16                
24           Sales                      105 units @ $24
 
Multiple Choice
 
    $7,705
    $3,540
    $4,165
    $4,005
    $3,700
   
A company’s inventory records report the following in November of the current year:
                                 
Beginning            November 1       6 units @ $6
Purchase              November 2       12 units @ $8
Purchase              November 12     8 units @ $10
 
On November 8, it sold 14 units for $36 each. Using the LIFO perpetual inventory method,
what was the amount recorded in the cost of goods sold account for the 14 units sold?
 
    $132
    $176
    $212
    $128
    $108
 
   
Big Box Store has operated with a 30% average gross profit ratio for a number of years.
It had $113,000 in sales during the second quarter of this year. If it began the quarter with $19,300
of inventory at cost and purchased $73,300 of inventory during the quarter, its estimated ending
inventory by the gross profit method is:
 
    $23,730.
    $33,900.
    $13,500
    $19,300.
    $30,900.
 
COGS = $113000 × .7 = $79100
Goods available for sale = $19300 + $73300 = $92600
End. Inv. = $92600 - 79100 = $13,500
   
On April 24 of the current year, The Memphis Pecan Company experienced a tornado that
destroyed the company's entire inventory. At the beginning of April, the company reported
beginning inventory of $227,750. Inventory purchased during April (until the date of the tornado)
was $198,800. Sales for the month of April through April 24 were $643,500.
Assuming the company's typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the tornado.
 
    $216,950
    $104,800
    $321,750
    $158,288
    $213,275
 
COGS = Gross profit ratio 50% on sales
COGS 643500 x .5 = 321750
Opening Inventory + Purchases during the month - Cost of Goods sold = Inventory held on date of fire
227750 + 198800 - 321750 = 104,800
   
A company had beginning inventory of 11 units at a cost of $26 each on March 1. On March 2, it purchased 11 units at $46 each.
On March 6 it purchased 5 units at $31 each. On March 8, it sold 25 units for $74 each. Using the FIFO perpetual inventory method,
what was the cost of the 25 units sold?
 
    $885
    $947
    $792
    $775
    $702
 
11 x 26 + 11 x 46 + 3 x 31 = 885
   
Jammer Company uses a weighted average perpetual inventory system and reports the following:
                                 
August 2              Purchase              9 units at $11.00 per unit.
August 18            Purchase              11 units at $15.00 per unit.
August 29            Sale                        18 units.
August 31            Purchase              14 units at $14.00 per unit.
 
What is the per-unit value of ending inventory on August 31? (Round your per unit answers to 2 decimal places.)
 
Multiple Choice
 
    $15.14
    $13.90.
    $14.00
    $11.00
    $13.20
 
Average Cost Perpetual Calculator
   
Use the following information for Shafer Company to compute inventory turnover for year 2.
 
                                                               Year 2                                                   Year 1     
Net sales              $                            648,500                               $             583,100                
Cost of goods sold                            388,700                                               360,860                
Ending inventory                             77,900                                                79,580  
 
    4.09
    7.33
    4.94
    5.94
    8.32
   
Sandoval needs to determine its year-end inventory.
The warehouse contains 40,000 units, of which 5,000 were damaged by flood and are not sellable.
Another 4,000 units were purchased from Markor Company, FOB shipping point, and are currently in transit.
The company also consigns goods and has 6,000 units at a consignee's location.
How many units should Sandoval include in its year-end inventory?
 
45000
 
40,000 – 5000 = 35000 + 4000 = 39000 + 6000 = 45,000
   
A company uses the periodic inventory system and had the following activity during the current monthly period.
 

November 1:	Beginning inventory	116 Units @ $10
November 5:	Purchased	116 Units @ $26
November 8:	Purchased	66 Units @ $25
November 16:	Sold	190 Units @ $125
November 19:	Purchased	95 Units @ $20

Using the weighted-average inventory method, the company's ending inventory would be:
 
$1,160
$3,991
$3,550
$4,710
$3,060
 
Ending Inventory = (393 units – 190 units) x 19.66 = 3991
   
On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory.
Because the company had not completed its month end reporting for August, it must estimate the amount of inventory
lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $216,250.
Inventory purchased during August was $192,850. Sales for the month of August were $544,100.
Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.
 
326,460
 
544,100 x .6 = 326,460
216,250 + 192850 = 326,460
   
A company has beginning inventory of 20 units at a cost of $12.00 each on October 1.
On October 5, it purchases 16 units at $13.00 per unit. On October 12 it purchases 26 units
at $14.00 per unit. On October 15, it sells 48 units. Using the FIFO periodic inventory method,
what is the value of the inventory at October 15 after the sale?


$168.00
$224.00
$364.00
$420.00
$196.00

Units available for sale = 20 + 16 + 26 = 62 units
Units in inventory = 62 - 48 = 14 units
Cost of inventory = 14 * $14 each = $196
   
Grays Company has inventory of 30 units at a cost of $11 each on August 1. On August 3, it
purchased 40 units at $12 each. 32 units are sold on August 6. Using the FIFO perpetual inventory
method, what amount will be reported in cost of goods sold for the 32 units that were sold?


$354.
$960.
$358.
$150.
$360.
 

(30 units * $11) + (2 units * $12) = $354.00
   
Salmone Company reported the following purchases and sales of its only product.
Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.

Date                      Activities                                              Units Acquired at Cost                    Units Sold at Retail
May 1                    Beginning Inventory                       150 units                              @                            $10.00
5                              Purchase                                             220 units                              @                            $12.00
10                           Sales                                                      140 units                              @                            $20.00
15                           Purchase                                             100 units                              @                            $13.00
24                           Sales                                                      150 units                              @                            $21.00

$3,180
$2,100
$2,260
$3,580
$1,860
$2,260

(80 * $12 = $960) + (100 * $13 = $1,300) = $2,260
   
Merchandise inventory includes:


All goods owned by a company and held for sale.
   
Salmone Company reported the following purchases and sales of its only product.
Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO.

Date                      Activities                              Units Acquired at Cost                    Units Sold at Retail
May 1                   Beginning Inventory        150 units                              @                            $10.00
5                             Purchase                             220 units                              @                            $12.00
10                           Sales                                      140 units                              @                            $20.00
15                           Purchase                             100 units                              @                            $13.00
24                           Sales                                      150 units                              @                            $21.00

$3,580
$3,180
$1,860
$2,260
$2,100
$1,860

(150 x $10 = $1,500) + (30 x $12 = $360) = $1,860
   
The inventory valuation method that results in the lowest taxable income in a period of inflation is:


LIFO method
   
Allister Company developed the following information about its inventories in applying the
lower-of-cost-or-market (LCM) basis in valuing inventories:

Product                Cost                       Market
A                             $112,000             $120,000
B                             80,000                 76,000
C                             155,000               162,000


If Allister applies the LCM basis, the value of the inventory reported on the balance sheet would be:

A. $362,000
B. $358,000
C. $343,000
D. $347,000
   
A company just starting business made the following four inventory purchases in June:

June 1 150 units @ $5.20/unit = $ 780
June 10 200 units @ $5.85/unit = 1,170
June 15 200 units @ $6.30/unit = 1,260
June 28 150 units @ $6.60/unit = 990

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.
Using the FIFO inventory method, the amount allocated to cost of goods sold for June is

A. $3,128
B. $2,895
C. $2,545
D. $1,305
   
The lower-of-cost-or-market basis of valuing inventories is an example of

A. the cost principle
B. conservatism
C. consistency
D. comparability
   
A company just starting business made the following four inventory purchases in June:




June 1.............150 units........................... $ 390
June 10...........200 units............................ 585
June 15...........200 units........................... 630
June 28...........150 units........................... 510
Total Cost $2115

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand.
Using LIFO, the value of ending inventory on June 30 is (round to the nearest dollar)

A. $683
B. $825
C. $1,290
D. $1,432
   
Cost of Goods Sold is computed from the following equation:

A. Sales + Gross Profit - Ending Inventory + Beginning Inventory
B. Beginning Inventory + Cost of Goods Purchased - Ending Inventory
C. Beginning Inventory - Cost of Goods Purchased + Ending Inventory
D. Sales - Cost of Goods Purchased + Beginning Inventory - Ending Inventory
   
A company just starting business made the following four inventory purchases in June:

Total Cost
June 1.............150 units........................... $ 390
June 10...........200 units............................ 585
June 15...........200 units........................... 630
June 28...........150 units........................... 510

$2,115
 

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand.
Using FIFO, the amount allocated to cost of goods sold for June is (round to the nearest dollar)

A. $1432
B. $1,290
C. $825
D. $683
   
Fetherston Company's goods in transit at December 31 include:

Sales Made Purchases Made
(1) FOB Destination (3) FOB Destination
(2) FOB Shipping Point (4) FOB Shipping Point

Which items should be included in Fetherston's inventory at December 31?

A. (2) and (4)
B. (1) and (3)
C. (1) and (4)
D. (2) and (3)
   
A company just starting business made the following four inventory purchases in June:

June 1 150 units @ $5.20/unit = $ 780
June 10 200 units @ $5.85/unit = 1,170
June 15 200 units @ $6.30/unit = 1,260
June 28 150 units @ $6.60/unit = 990

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.

Using the average cost method, the amount allocated to the ending inventory on June 30 is

A. $1,150
B. $3,000
C. $4,200
D. $1,200
   
Beginning inventory plus net cost of purchases equals

A. Cost of Goods Sold
B. Cost of Goods Available for Sale
C. Ending Inventory
D. Freight In
   
A company just starting in business purchased three merchandise inventory items at the following prices.
First purchase $64; second purchase $76; third purchase $68. If the company sold two units for a total of
$200 and used FIFO costing, the gross profit for the period would be

A. $60
B. $56
C. $62
D. $68
   
Allister Company developed the following information about its inventories in applying the
lower-of-cost-or-market (LCM) basis in valuing inventories:


Product Cost Market

A $112,000 $120,000
B 80,000 76,000
C 155,000 162,000

If Allister applies the LCM basis, the value of the inventory reported on the balance sheet would be:

A. $358,000
B. $362,000
C. $343,000
D. $347,000
   
A company just starting business made the following four inventory purchases in June:

Total Cost

June 1.............150 units........................... $ 390
June 10...........200 units............................ 585
June 15...........200 units........................... 630
June 28...........150 units........................... 510

$2,115

 
A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand.
Using the average-cost method, the amount allocated to the ending inventory on June 30 is
(round to the nearest dollar)

A. $683
B. $1360
C. $825
D. $755
   
A company just starting business made the following four inventory purchases in June:

June 1 150 units @ $5.20/unit = $ 780
June 10 200 units @ $5.85/unit = 1,170
June 15 200 units @ $6.30/unit = 1,260
June 28 150 units @ $6.60/unit = 990

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.
Using the FIFO inventory method, the amount allocated to cost of goods sold for June is

A. $2,895
B. $2,545
C. $3,128
D. $1,305
   
As a result of a physical inventory, Horace Company determined that it had inventory worth $320,000
at December 31, 2015. This count did not take into consideration the following facts: Bretton
Consignment currently has goods worth $47,000 on its sales floor that belong to Horace but are being
sold on consignment by Bretton. The selling price of these goods is $75,000. Horace purchased $22,000
of goods that were shipped on December 27, FOB Destination, that will be received by Horace on January 3.
Determine the correct amount of inventory that Horace should report.

A. $367,000
B. $387,000
C. $320,000
D. $340,000
   
A company just starting business made the following four inventory purchases in June:

Total Cost

June 1.............150 units........................... $ 390
June 10...........200 units............................ 585
June 15...........200 units........................... 630
June 28...........150 units........................... 510

$2115

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand.
Using FIFO, the amount allocated to cost of goods sold for June is (round to the nearest dollar)

A. $683
B. $1290
C. $1432
D. $825
B. $1290
   
A company just starting business made the following four inventory purchases in June:

June 1 150 units @ $5.20/unit = $ 780
June 10 200 units @ $5.85/unit = 1,170
June 15 200 units @ $6.30/unit = 1,260
June 28 150 units @ $6.60/unit = 990

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.
Using the LIFO inventory method, the value of the ending inventory on June 30
(rounded to the nearest dollar) is

A. $1,305
B. $1,073
C. $2,895
D. $3,128
   
Under the terms FOB destination, ownership of the goods passes to the buyer when the
public carrier accepts the goods from the seller. (t/f)
 
False

 
Freight terms of FOB Destination means that the seller pays the freight costs. (t/f)
 
True

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