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Exam 8: Inventories

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Question 81

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Condensed income statements for Newlon Company are shown below for two years. Compute the corrected income before income taxes for 2009 and 2010 assuming that the inventory as of the end of 2009 was mistakenly understated by $13,000.

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2009 = $34,000 (EI understated...

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Question 82

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Days' inventory on hand equals 365 divided by

A) inventory turnover.
B) cost of goods sold.
C) goods available for sale.
D) average inventory.

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

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Question 83

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Use the following figures (stated in millions of dollars) to compute the inventory turnover and the days' inventory on hand: a. Inventory turnover = ___________________ b. Days' inventory on hand = ___________________

Despite its advantages, the just-in-time operating environment produces increased carrying costs for inventory.

A retail store has beginning inventory of $30,000, purchases of $220,000, sales of $200,000, and a normal gross margin of 25 percent. What is estimated inventory based on these facts and the gross profit method?

Ending merchandise inventory for LIFO will be the same dollar amount under a periodic inventory system as under a perpetual inventory system.

Marina Sailboats reports income before income taxes of $80,000 during 2010. If beginning inventory was overstated by $7,000 and ending inventory was understated by $8,000, calculate corrected income before income taxes for the year. (Show your work.

When taking a physical inventory under the retail method, it is necessary to know only the quantity of items on hand.

Use this information to answer the following question. A periodic inventory system is used. Using the average-cost method, the cost assigned to ending inventory is

Inventory turnover is a measure expressed in terms of a percentage.

Goods held on consignment are

Average inventory equals $100,000, and cost of goods sold equals $221,000. Days' inventory on hand equals A) 165.2 days. B) 165.2 days. C) 154.3 days. D) 188.7 days.

How does the perpetual inventory system differ from the periodic inventory system in the determination of cost of goods sold?

The higher the inventory turnover, the higher the days' inventory on hand.