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Exam 8: Inventories: Measurement

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Question 21

Multiple Choice

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Inventory does not include:

A) Materials used in the production of goods to be sold.
B) Assets intended to be sold in the normal course of business.
C) Equipment used in the manufacturing of assets for sale.
D) Assets currently in production for normal sales.

E) None of the above
F) B) and D)

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Question 22

Multiple Choice

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The average days inventory for ATC for 2009 is:

A) Less than 100 days.
B) 114 days.
C) 132 days.
D) 151 days.Inventory turnover = $138,000 [($43,000 + 57,000) 2] = 2.76 365 2.76 = 132 days

E) B) and C)
F) C) and D)

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Question 23

Multiple Choice

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The ending inventory under a periodic inventory system assuming average cost is:

The following information is taken from the accounting records of Madeline Inc. for the year 2009. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Bond Company adopted the dollar-value LIFO inventory method on January 1, 2009. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO: Under the dollar-value LIFO method the inventory at December 31, 2010, should be

Dollar-value LIFO eliminates the risk of LIFO liquidations.

Purchases equal the invoice amount:

What is Nu's net income if it elects LIFO?

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank. Required: Compute the missing amounts. -

LIFO liquidation profits occur when inventory quantity declines and costs are rising.

The following information comes from the 2007 General Motors (GM) Corporation annual report to shareholders: Inventories included the following for Automotive and Other Operations ($ in millions): Inventories are stated generally at cost, which is not in excess of market. The cost of approximately 50% of U.S. inventories is determined by the last-in, first-out (LIFO) method. The cost of all other inventories is determined primarily by the FIFO method. Footnote 6 in GM's financial statements indicated that the LIFO allowance was $1,423 at the end of 2007 and $1,508 at the end of 2006 ($ in millions). In other words, GM's inventories would have been higher by these amounts had the company used FIFO to value all of its inventories. GM's cost of goods sold for 2007 was $166,259 million. Required: If GM used only FIFO for its inventories instead of its current policy, what would its cost of goods sold have been for 2007? December 31. $\begin{array}{rr}&\underline{2007} & \underline{2006} \\\text { Total inventories }&\$ 14,939 & \$ 13,921\end{array}$

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank. Required: Compute the missing amounts. -

What is Nueva's gross profit ratio if it elects FIFO?

Thompson's 2009 inventory turnover ratio is:

Ending inventory using the FIFO method is:

Bunker Auto Supply purchased merchandise on January 4, 2009, at a price of $70,000, subject to credit terms of 2/10, n30. Bunker uses the gross method for recording purchases and uses a periodic inventory system. Required: 1. Prepare the journal entry to record the purchase. 2. Prepare the journal entry to record the payment of one-half the invoice amount on January 11, 2009. 3. Prepare the journal entry to record the balance of the amount due on February 2, 2009.

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a periodic inventory system.

Shipping charges on outgoing goods are included in cost of goods sold.

What is Nu's gross profit ratio if it elects LIFO?

In a perpetual inventory system, the cost of purchases is debited to: