Intermediate Accounting Study Set 7

A perpetual inventory system always provides current information about inventory levels.

A periodic inventory system is used by most companies today due to the proliferation of computers.

Beginning inventory + Net Purchases = Cost of Goods Sold.

The work-in-process inventory is found on the books of a merchandising concern.

The flow of a manufacturer's product costs through the inventory accounts is ________.

Firms using the periodic inventory system record purchases of inventory with a ________.

Which statement is not correct about perpetual inventory systems?

Charles Company's balance sheet reports Raw Materials Inventory, $570,000; Finished Goods Inventory, $695,000; and total inventories at $1,901,000. What is the value of Work-in-Process Inventory?

Richard Company's financial records report beginning inventory of $535,000; ending inventory of $697,000; and cost of goods sold of $1,396,000. What is the amount of purchases?

Destiny Industries reports beginning inventory of $254,000, purchases of $559,000, and ending inventory of $198,000. What is the cost of goods sold?

Donaldson Corporation uses a periodic inventory system. On January 1, inventory is $253,000. On April 5, Donaldson sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are) ________.

Dombrose Company uses a perpetual inventory system. On January 1, inventory is $253,000. On April 5, Dombrose sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are) ________.

The Peggy Ahlers Company uses the perpetual inventory system and the FIFO method. At the end of the fiscal year, December 31, 2015, the company conducted a physical count of the inventory on hand at all warehouses and stores. The FIFO cost of the physical count is $1,005,400. According to the records, ending inventory using FIFO is $1,122,000. Which journal entry is required at December 31, 2015?

A large company uses a perpetual inventory system and a sophisticated computerized system to account for its inventory over time. At the end of the accounting period, the company performs a physical count of the inventory on hand and hires hundreds of workers to carry out this task. Required: 1. Why does the company perform a physical count of inventory? 2. After the physical count of inventory is completed, describe the required journal entry and provide an example.

The total cost in dollars of ending inventory is equal to the number of units on hand multiplied by the cost per unit.

Freight-out costs are included as part of inventory costs.

Freight-in costs are treated as a selling expense.

When goods are shipped f.o.b. shipping point, title passes when the goods reach the buyer's dock.

Purchase returns and purchase discounts are added to purchases to calculate net purchases.

Purchase returns and purchase discounts are subtracted from purchases to calculate net purchases.