Question 1

On the basis of the following data,determine the value of the inventory at the lower of cost or market.Apply lower of cost or market to each inventory item.Show your work.

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Question 2

The units of an item available for sale during the year were as follows:
 $\begin{array}{llll}
\text { Jan. } & 1 & \text { Inventory } & \quad\quad & 10 \text { units at } \$ 25 \
\text { Apr. } & 4 & \text { Purchase } &\quad\quad & 15 \text { units at } \$ 24 \
\text { May. } & 20 & \text { Purchase } &\quad\quad & 20 \text { units at } \$ 28 \
\text { Oct. } & 30 & \text { Purchase } & \quad\quad &18 \text { units at } \$ 30
\end{array}$
 There are 19 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using LIFO.

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Question 3

Basic inventory data for April 30 are presented below for a business that employs the lower-of-cost-or-market basis of inventory valuation to each category.
 $\begin{array}{cccccccc}
\text { Commodity } & \begin{array}{c}
\text { Inventory } \
\text { Quantity }
\end{array} & \begin{array}{c}
\text { Cost per } \
\text { Unit }
\end{array} & \begin{array}{c}
\text { Market Value } \
\text { per Unit }
\end{array} & \text { Cost } &  \begin{array}{c}
\text { Total } \
\text { Market }
\end{array} & \text { LCM } \
\hline \text { A } & 35 & \$ 52 & \$ 55 &---&--- & --- \
\hline \text { B } & 20 & 155 & 150 &---&--- & --- \
\hline \text { C } & 25 & 82 & 85 &---&--- & --- \
\hline \text { D } & 40 & 58 & 55 &---&--- & --- \
\hline
\end{array}$ a Complete the table.
b Determine the amount of reduction in the inventory at April 30 attributable to market decline.

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Question 4

The units of an item available for sale during the year were as follows:

There are 30 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using FIFO.

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Question 5

The units of Product Green-2 available for sale during the year were as follows:
 $\begin{array}{lrll}
\text { Aprl } & 1 & \text { Inventory } & 15 \text { units } &@&  \$30  \
\text { June } & 16 & \text { Purchase } & 29 \text { units } &@&  \$33\
\text { Sep. } & 28 & \text { Purchase } & 45 \text { units }&@&  \$35
\end{array}$
 There are 17 units of the product in the physical inventory at September 30.The periodic inventory system is used.Determine the cost of merchandise sold by a FIFO,b LIFO,and c average cost methods.

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Question 6

The following data were taken from Castle,Inc.

Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc.Round to two
decimal places.

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Determine...

Question 7

Based on the following information,compute a inventory turnover; b average daily cost of merchandise sold using a 365 day year; and c number of days' sales in inventory.

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Question 8

The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account:
 $\begin{array}{rlll}
\text { June } 1 & \text { Balance } & \quad  \quad&25 \text { units at } \$ 60 \
6 & \text { Sale } & \quad  \quad& 20 \text { units } \
8 & \text { Purchase } & \quad  \quad& 20 \text { units at } \$ 61 \
16 & \text { Sale } &  \quad  \quad&10 \text { units } \
20 & \text { Purchase } & \quad  \quad& 20 \text { units at } \$ 62 \
23 & \text { Sale } &  \quad  \quad&25 \text { units } \
30 & \text { Purchase } & \quad  \quad& 15 \text { units at } \$ 63
\end{array}$
 Calculate the cost of the ending inventory at June 30,using a the first-in,first-out FIFO method and b the last-in,first-out LIFO method.Identify the quantity,unit price,and total cost of each lot in the inventory.

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Question 9

A business using the retail method of inventory costing determines that merchandise inventory at retail is $2,300,000.If the ratio of cost to retail price is 55%,what is the amount of inventory to be reported on the financial statements?

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Question 10

The following data were taken from the annual reports of Big Bang Inc.,a manufacturer of fireworks,and Orange Inc.,a manufacturer of computers.
 $\begin{array}{|l|r|r|}
\hline & {\text { Big Bang, Inc. }} & {\text { Orange, Inc. }} \
\hline \text { Cost of merchandise sold } & \$ 830,000 & \$ 11,540,000 \
\hline \text { Inventory, end of year } & 190,000 & 320,000 \
\hline \text { Inventory, beginning of year } & 240,000 & 290,000 \
\hline
\end{array}$ a Determine the 1 inventory turnover and 2 number of days' sales in inventory for Big Bang and Orange.Round your answers to two decimal places.
b How would you expect these measures to compare between the companies? Why?

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Question 11

Based upon the following data,estimate the cost of ending merchandise inventory using the gross profit method.

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Question 12

Describe three inventory cost flow assumptions and how they impact the financial statements.

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Question 13

Hampton Co.took a physical count of its inventory on December 31.In addition,it had to decide whether or not the following items should be added to this count.
a. Merchandise on hand had been sold earlier in the year but had been returned by customers for various warranty repairs.
b. Hampton Co.sent merchandise on a consignment basis on December 31 just prior to the physical count.
c. On December 22,Hampton Co.ordered merchandise on FOB destination terms.The merchandise was shipped by the supplier on December 30 but had not been received by December 31.
d. On December 27,Hampton Co.ordered merchandise on FOB shipping point terms.The merchandise was shipped on December 29 but had not been received by December 31.
e. Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31.
f. Merchandise shipped to a customer FOB destination was picked up by the freight company on December 28 but had not arrived at its destination as of December 31.
Answer "yes" or "no" to indicate which items should and should not be added to the December 31 inventory count.

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Question 14

List the internal control objectives illustrated by the following:
a. keeping the inventory storeroom locked
b. counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records
c. using subsidiary ledgers and a perpetual inventory system

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Question 15

Beginning inventory,purchases,and sales data for hammers are as follows:
 $\begin{array}{|c|c|l|c|c|r|}
\hline & \text { Mar. } 3 & \text { Inventory } & 12 \text { units } & @ & \$ 15 \
\hline & 11 & \text { Purchase } & 13 \text { units } & @ & \$ 17 \
\hline & 14 & \text { Sale } & 18 \text { units } & & \
\hline & 21 & \text { Purchase } & 9 \text { units } & @ & \$ 20 \
\hline & 25 & \text { Sale } & 10 \text { units } & &\
\hline
\end{array}$ 
Assuming the business maintains a perpetual inventory system,complete the inventory cards and calculate the cost of merchandise sold and ending inventory under the following assumptions:
a First-in,first-out

$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Cost of Merchandise }\
\text { Purchases } \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad  \text { Sold }\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Inventory }\
\begin{array}{|r|l|l|l|l|l|l|l|l|l|}
\hline & & \text { Unit } & \text { Total } & & \text { Unit } \
\text { Date } & \text { Qty. } & \text { Cost } & \text { Cost } & \text { Qty. } & \text { Cost } & \text { Cost } & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} \
\hline \text { Mar. 3 } & & & & & & & & & \
\hline 11 & & & & & & & & & \
\hline 14 & & & & & & & & & \
\hline 21 & & & & & & & & & \
\hline 25 & & & & & & & & & \
\hline
\end{array}
\end{array}$ 
b Last-in,first-out

$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Cost of Merchandise }\
\text { Purchases } \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad  \text { Sold }\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Inventory }\
\begin{array}{|r|l|l|l|l|l|l|l|l|l|}
\hline & & \text { Unit } & \text { Total } & & \text { Unit } \
\text { Date } & \text { Qty. } & \text { Cost } & \text { Cost } & \text { Qty. } & \text { Cost } & \text { Cost } & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} \
\hline \text { Mar. 3 } & & & & & & & & & \
\hline 11 & & & & & & & & & \
\hline 14 & & & & & & & & & \
\hline 21 & & & & & & & & & \
\hline 25 & & & & & & & & & \
\hline
\end{array}
\end{array}$

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Question 16

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

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Quiz 6: Inventories

On the basis of the following data,determine the value of the inventory at the lower of cost or market.Apply lower of cost or market to each inventory item.Show your work.

The units of an item available for sale during the year were as follows: There are 30 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using FIFO.

The following data were taken from Castle,Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc.Round to two decimal places.

Based on the following information,compute a inventory turnover; b average daily cost of merchandise sold using a 365 day year; and c number of days' sales in inventory.

A business using the retail method of inventory costing determines that merchandise inventory at retail is $2,300,000.If the ratio of cost to retail price is 55%,what is the amount of inventory to be reported on the financial statements?

Based upon the following data,estimate the cost of ending merchandise inventory using the gross profit method.

Describe three inventory cost flow assumptions and how they impact the financial statements.

List the internal control objectives illustrated by the following: a. keeping the inventory storeroom locked b. counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records c. using subsidiary ledgers and a perpetual inventory system

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.