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Exam 6: Inventory and Cost of Goods Sold

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Question 1

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What is a multiple-step income statement? What information does it provide beyond "bottom-line" net income?

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A multiple-step income statement reports...

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The LIFO difference (reserve)is the additional amount of inventory a company would report if it used FIFO instead of LIFO.

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Question 3

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A company uses a periodic system to record inventory transactions.The company purchases inventory on account on February 9,2015,for $50,000 and then sells this inventory on account on March 7,2015,for $70,000.Record the transactions for the purchase and sale of the inventory.

During 2015,a company sells 200 units of inventory for $50 each.The company has the following inventory purchase transactions for 2015: Actual sales by the company include its entire beginning inventory,80 units of inventory from the May 5 purchase,and 70 units from the November 3 purchase.Calculate cost of goods sold and ending inventory for 2015 assuming the company uses specific identification.

In a period when inventory costs are falling,the lowest taxable income is most likely reported by using the inventory method of:

For most companies,actual physical flow of their inventory follows LIFO.

Which inventory method is better described as having a balance sheet focus and why is it considered as such?

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Equals income before income taxes less income taxes.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ LIFO must be used for financial reporting if elected for taxes.

Inventory records for Dunbar Incorporated revealed the following: Dunbar sold 700 units of inventory during the month.Ending inventory assuming LIFO would be:

A company begins the year with inventory of $50,000 and ends the year with inventory of $55,000.During the year,the following amounts are recorded: Calculate cost of goods sold for the year.

At the time inventory is sold,cost of goods sold is recorded under the perpetual inventory system.

In a period when inventory costs are rising,the inventory method that most likely results in the highest ending inventory is:

Cost of goods sold is an asset reported in the balance sheet and inventory is an expense reported in the income statement.

Inventory records for Dunbar Incorporated revealed the following: Dunbar sold 700 units of inventory during the month.Ending inventory assuming FIFO would be:

One of the primary benefits of using FIFO when inventory costs are rising is that it results in greater tax savings.

Using the weighted-average cost method,the average cost of inventory is calculated as the average unit cost of inventory purchased during the year.

During 2015,a company sells 20 units of inventory.The company has the following inventory purchase transactions for 2015: Calculate ending inventory and cost of goods sold for 2015 assuming the company uses weighted-average cost with a periodic inventory system.

Using a perpetual inventory system,the purchase of inventory is recorded with a debit to the Purchases account,which is a temporary account closed to cost of goods sold at the end of the period.

During periods of rising costs,LIFO generally results in a higher cost of goods sold.