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Exam 7: Inventories

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Question 91

True/False

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Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

A) True
B) False

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Question 92

Multiple Choice

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When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:

A) debit Cost of Merchandise Sold; credit Sales
B) debit Cost of Merchandise Sold; credit Merchandise Inventory
C) debit Merchandise Inventory; credit Cost of Merchandise Sold
D) No journal entry is made to record the cost of merchandise sold.

E) A) and B)
F) All of the above

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Question 93

Essay

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During the taking of its physical inventory on December 31, 2011, Gentry Supplies Company incorrectly counted its inventory as $245,000 instead of the correct amount of $254,000. Indicate the affect of the misstatement on Gentry Supplies Company's balance sheet and income statement for the year ended December 31, 2011.

If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the

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. Indicate which items should be added to (answer: yes) and which items should not be added to (answer: no) the December 31 inventory count.

Determine the total value of the merchandise using Net Realizable Value:

Safeguarding inventory and proper reporting of the inventory in the books are the reasons for controlling the inventory.

Beginning inventory, purchases and sales data for T-shirts are as follows: Assuming the business maintains a periodic inventory system, calculate the cost of merchandise sold and ending inventory under the following assumptions: a. FIFO b. LIFO c. Average cost (round cost of merchandise sold and ending inventory to the nearest dollar)

Beginning inventory, purchases and sales data for tennis rackets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO.