Chapter 7 pt 1 Flashcards
The following information was available from the inventory records of Rich Company for January:
Units Per U
Beginning Balance
January 1 9,000 $9.77
Purchases:
January 6 6,000 10.30
January 26 8,100 10.71
Sales:
January 7 (7,500)
January 31 (11,100)
Ending Balance
January 31 4,500
Assuming that Rich maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar?
$46,620
CPU = cost per unit
BB = beginning balance
AMT = amount
- BB + 1st purch / total units = avg cpu
- avg * units 1st sale = amount to dec inventory
- bb + 1st - amt in #2
- amount in # 3 + 2nd purch
- amount in #4 / total units in inventory as of that date
- cpu found in #5 * 2nd sale = amount to dec inventory
- amount in #4 - amount in #6
Where should goods in transit that were shipped f.o.b. destination and have not been received be reported on the buyer’s balance sheet?
Not on the balance sheet
They were not received
Kerr Co.’s accounts payable balance at December 31, 2025 was $1,600,000 before considering the following transactions:
* Goods were in transit from a vendor to Kerr on December 31, 2025. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29, 2025. The goods were received on January 4, 2026.
* Goods shipped to Kerr, f.o.b. shipping point on December 20, 2025, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2026, Kerr filed a $50,000 claim against the freight company.
In its December 31, 2025 balance sheet, Kerr should report accounts payable of
$1,720,000
Cost of goods available for sale is computed as follows:
Beginning inventory + net purchases
OR ending inventory + cost of goods sold
TS Quilts Inc. took a physical inventory at the end of the year and determined that $414,000 of goods were on hand. TS Inc. determined that $12,000 of goods held and included in the court were being held on consignment from PDJ outlet. Additionally, because of high rates of return on some products, TS has established an estimate of items that will be returned of $17,000. What amount should TS report in their year-end balance sheet for the inventory account?
$419,000
add the est. (getting the inventory back)
Niles Co. has the following data related to an item of inventory:
Inventory, March 1 400 units @ $2.10
Purchase, March 7 1,400 units @ $2.20
Purchase, March 16 280 units @ $2.25
Inventory, March 31 520 units
The value assigned to cost of goods sold if Niles uses periodic FIFO is
$3,392
Nichols Company had 500 units of “Dink” in its inventory for $5 each. It purchased, for $2,400, 300 more units of “Dink”. Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100. The cost flow assumption used by Nichols
LIFO
The following information was available from the inventory records of Rich Company for January:
Units Per U
Beginning Balance
January 1 9,000 $9.77
Purchases:
January 6 6,000 10.30
January 26 8,100 10.71
Sales:
January 7 (7,500)
January 31 (11,100)
Ending Balance
January 31 4,500
Assuming that Rich does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar?
$46,067
don’t round the cpu
EJ Toys Company has a balance in inventory of $624,000 at the beginning of the month. During the month EJ purchases additional inventory of $7,653,000. EJ has sales during the month of $9,873,000 with a related cost of goods sold on these sales of $7,389,000. What is EJ’s ending inventory at the end of month?
$888,000
(bi + np) - cogs
Winsor Co. records purchases at net amounts. On May 5 Winsor purchased merchandise on account, $80,000, terms 2/10, n/30. Winsor returned $6,000 of the May 5 purchase and received credit on account. At May 31, the balance had not yet been paid.
The amount to be recorded as a purchase return is
$5,880
6000 - (6000*0.02)
The following information applied to Howe, Inc. for 2025:
Merchandise purchased for resale $410,000
Freight-in 8,000
Freight-out 5,000
Purchase returns 2,000
Howe’s 2025 inventoriable cost was
$416,000
410000+8000-2000
characteristic of a perpetual inventory system
when is cost of goods recorded?
Cost of goods sold is recorded with each sale
Sparrow Company uses the perpetual inventory system and began business on August 1. During the month Sparrow made inventory purchases of $8,400, terms of 3/15, n/45. Sparrow returned $300 worth of goods during the month, paid all suppliers in time to take advantage of all offered cash discounts during the month and sold inventory with a value of $5,350. These were the only inventory transactions during the month. What is the balance in the inventory account at the end of August?
$2,507
1. 8400-(8400*0.03)
2. 8148-(300-9)-5350
300*0.03 = 9
Pontoon Company uses the perpetual inventory system. It began operations in October. October through December, the accounting information system shows that purchases of $67,000 were made. Pontoon returned goods with a cost of $3,600. Inventory with a cost of $53,300 was sold during the three months. These were the only inventory transactions during the period. A physical count of inventory at the end of December reported total inventory of $9,800 remains on hand. An adjustment to bring the perpetual inventory count in line with the physical count would include a debit to Inventory Over and Short (or Cost of Goods Sold) for
$300
Malone Corporation uses the perpetual inventory and the gross method. On March 1, it purchased $80,000 of inventory, terms 2/10, n/30. On March 3, Malone returned goods that cost $8,000. On March 9, Malone paid the supplier. On March 9, Malone’s entry to record the payment to the supplier should credit
return…discount
inventory for $1,440
