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Ex. 206 Nolen Company is preparing the annual financial statements dated December 31, 2016. Information about inventory stocked for regular sale follows: QuantityUnit CostReplacement Cost Itemon HandWhen Acquired(market) at year end A50$20$19 B1004545 C205962 D404036 Instructions Compute the valuation for the December 31, 2016, inventory using the lower-of-cost-or-market basis. Ex. 207 Laurie Company applied FIFO to its inventory and got the.
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42.The balance of a control account in the general ledger a.must always be zero. b.must equal the amount of total assets. c.is always greater than the composite balance of individual accounts in a related subsidiary ledger. d.must equal the composite balance of individual accounts in a related subsidiary ledger. 43.A subsidiary ledger is a.used in place.
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Ex. 198 Tyler Company reported the following summarized annual data at the end of 2016: Sales revenue$1,000,000 Cost of goods sold*     600,000 Gross margin400,000 Operating expenses    280,000 Income before income taxes$   120,000 *Based on an ending FIFO inventory of $240,000. The income tax rate is 30%. The controller of the company is considering a switch from FIFO to.
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aEx. 214 The inventory of Willamette Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: Sales Revenue$185,000 Sales Returns and Allowances5,000 Purchases110,000 Freight-In4,000 Purchase Returns and Allowances3,500 Instructions Determine the merchandise lost by fire, assuming a beginning inventory of.
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Ex. 192 Irish Company uses the periodic inventory method and had the following inventory information available: UnitsUnit CostTotal Cost 1/1Beginning Inventory100$5$   500 1/20Purchase400$62,400 7/25Purchase200$71,400 10/20Purchase   300$8  2,400 1,000$6,700 A physical count of inventory on December 31 revealed that there were 480 units on hand. Instructions Answer the following independent questions and show computations supporting your answers. 1.Assume that the company.
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44.For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except a.to check the accuracy of the records. b.to determine the amount of wasted raw materials. c.to determine losses due to employee theft. d.to determine ownership of the goods. 45.Heathroton Company's goods in transit at December.
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164.Under IFRS, companies can choose which inventory system? a.Yes No b.YesYes c.NoYes d.No No 165.GAAP’s definition for inventory and provision of guidelines for inventory accounting, as compared to IFRS are: a.essentially similarmore detailed b.essentially differentmore detailed c.essentially similarless detailed d.essentially differentless detailed 166.Inventories are defined by IFRS as a.held-for-sale in the ordinary course of business. b.in the process of production for sale.
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124.The lower-of-cost-or-market basis of valuing inventories is an example of a.comparability. b.the historical cost principle. c.conservatism. d.consistency. 125.Under the lower-of-cost-or-market basis in valuing inventory, market is defined as a.current replacement cost. b.selling price. c.historical cost plus 10%. d.selling price less markup. 126.The lower-of-cost-or-market (LCM) basis may be used with all of the following methods except 127.Barley Company developed the following information.
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EXERCISES Ex. 190 The following information is available for Clancy Company: Beginning inventory600 units at $4First purchase900 units at $6.50Second purchase500 units at $7.20 Assume that Clancy uses a periodic inventory system and that there are 760 units left at the end of the month. InstructionsCompute the cost of ending inventory under the (a)FIFO method. (b)LIFO method. Ex..
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Ex. 204 Compute the lower-of-cost-or-market valuation for Gantner Company's total inventory based on the following:Inventory CategoriesCost DataMarket Value Data A$18,000$16,900B  13,900  14,600C  21,000  20,500 Ex. 205 The controller of Greene Yard Company is applying the lower-of-cost-or-market basis of valuing its ending inventory. The following information is available:     Cost  Market Value Lawnmowers: Self-propelled$16,800$17,000 Push type  19,500  18,000 Total  36,300  35,000 Snowblowers: Manual29,80030,000 Self-start .
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94.Storme Shutters has the following inventory information. 8Purchase120 units @ $8.30 17Purchase  60 units @ $8.70 25Purchase  90 units @ $8.80 a.$655. b.$704. c.$1,758. d.$1,812. 95.Storme Shutters has the following inventory information. 8Purchase120 units @ $8.30 17Purchase  60 units @ $8.70 25Purchase  90 units @ $8.80 a.$655. b.$704. c.$1,756. d.$1,812. 96.Storme Shutters has the following inventory information. 8Purchase120 units @ $8.30 17Purchase  60 units @ $8.40 25Purchase  90 units.
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TRUE-FALSE STATEMENTS 1.An accounting information system should be cost effective; that is, the benefits of the information must outweigh the cost of providing it. 2.An accounting system has flexibility if it is able to be used by many different companies at the same time. 3.General ledger accounting systems are software programs that integrate.
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72.Cash from sales of merchandise will be recorded in the a.purchases journal. b.sales journal. c.cash receipts journal. d.general journal. 73.Postings from the purchases journal to the general ledger are made a.daily. b.monthly. c.weekly. d.yearly. 74.The individual amounts in the Accounts Payable column in the cash payments journal are posted to the subsidiary ledger a.daily. b.monthly. c.weekly. d.yearly. 75.Debit postings to the individual accounts in an.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  227 FIFO and LIFO are the two most common cost flow assumptions made in costing inventories. The amounts assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in ending inventory.
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Ex. 208 This information is available for Sheena's Photo Corporation for 2016 and 2017.    2016        2017  Beginning inventory$ 200,000$ 300,000 Ending inventory300,000365,000 Cost of goods sold1,200,0001,330,000 Sales revenue1,600,0001,900,000 InstructionsCalculate inventory turnover, days in inventory, and gross profit rate for Sheena's Photo Corporation for 2016 and 2017. Comment on any trends. .
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aEx. 211 Norris Company uses the perpetual inventory system and had the following purchases and sales during March.         Purchases                      Sales         Units     Unit CostUnits     Selling Price/Unit 3/1Beginning inventory100$40 3/3Purchase60$50 3/4Sales70$80 3/10Purchase200$55 3/16Sales80$90 3/19Purchase40$60 3/25Sales120$90 Instructions Using the inventory and sales data above, calculate the value assigned to cost of goods sold in March and to the ending inventory at March 31 using.
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aEx. 212 Shannon's Department Store prepares monthly financial statements but only takes a physical count of merchandise inventory at the end of the year. The following information has been developed for the month of July:   At Cost At Retail Beginning inventory$  36,000$  50,000 Merchandise purchases99,000150,000 The net sales for July amounted to $150,000. Instructions Use the.
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Ex. 201 For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code:O=  item is overstated U=  item is understated NA=  item is not affected Events Items Assets Owner’s Equity Cost of Goods Sold Net Income 1.A.
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154.In a period of inflation, the cost flow method that results in the lowest income taxes is the a.FIFO method. b.LIFO method. c.average-cost method. d.gross profit method. 155.In a period of rising prices, FIFO will have a.lower net income than LIFO. b.lower cost of goods sold than LIFO. c.lower income tax expense than LIFO. d.lower net purchases than LIFO. 156.Under.
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Ex. 202 T. Allen's Hardware Store prepared the following analysis of cost of goods sold for the previous three years:    2015   2016   2017 Beginning inventory 1/1$40,000$18,000$25,000 Cost of goods purchased  50,000  55,000 70,000 Cost of goods available for sale90,00073,00095,000 Ending inventory 12/31  18,000  25,000  40,000 Cost of goods sold$72,000$48,000$55,000 Net income for the years 2015, 2016,.
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62.Correcting entries are journalized in a.a special journal. b.the general journal. c.the general ledger. d.a correcting journal. 63.Adjusting entries are recorded a.only on the worksheet. b.only in the general ledger. c.in the general journal. d.in the special journals. 64.All of the column totals in the cash receipts journal are posted to general ledger accounts except the a.Accounts Receivable column total. b.Cash column.
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Ex. 196 Tipp Topp Company reports the following for the month of June. UnitsUnit CostTotal Cost June 1  Inventory300$5$1,500 12  Purchase45062,700 23  Purchase7507.605,700 30  Inventory180 Instructions (a)Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO. (b)Compute the cost of the ending inventory and the cost of goods sold using.
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84.Henri Company's inventory records show the following data: a.$29,000. b.$179,900. c.$179,300. d.$178,500. 85.Henri Company's inventory records show the following data: a.$8.00. b.$8.60. c.$8.30. d.$8.15. 86.Henri Company's inventory records show the following data: a.$78,250 b.$84,100 c.$81,400 d.$84,700 87.Henri Company's inventory records show the following data: a.$1,170 additional taxes b.$630 additional taxes c.$1,290 additional taxes d.$630 tax savings 88.Pasquale has the following inventory information. 7Purchases70 units at $201,400 22Purchases10 units at $24     240 a.$585. b.$606. c.$630. d.$660. 89.Pasquale has.
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 MULTIPLE CHOICE QUESTIONS 34.Inventories affect a.only the balance sheet. b.only the income statement. c.both the balance sheet and the income statement. d.neither the balance sheet nor the income statement. 35.Inventory is a.reported under the classification of Property, Plant, and Equipment on the balance sheet. b.often reported as a miscellaneous expense on the income statement. c.reported as a current asset.
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S-A E  232 Jill Tango is studying for the next accounting mid-term examination. What should Jill know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method? S-A E  233(Ethics) Glenda Good and Danny Rock are department managers in the house wares.
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Ex. 193 Lester Company sells many products. Hackenberry is one of its popular items. Below is an analysis of the inventory purchases and sales of Hackenberry for the month of March. Lester Company uses the periodic inventory system.           Purchases           Sales          UnitsUnit CostUnitsSelling Price/Unit 3/1Beginning inventory100$40 3/3Purchase60$50 3/4Sales70$80 3/10Purchase200$55 3/16Sales80$90 3/19Sales60$90 3/25Sales40$90 3/30Purchase40$65 Instructions (a)Using the FIFO assumption, calculate the amount charged to cost.
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Ex. 199 Morton Watch Company reported the following income statement data for a 2-year period.    2016       2017   Sales revenue$260,000$320,000 Cost of goods sold Beginning inventory32,00044,000 Cost of goods purchased  193,000  225,000 Cost of goods available for sale225,000269,000 Ending inventory    44,000    57,000 Cost of goods sold  181,000  212,000 Gross profit$  79,000$108,000 Mortan uses a periodic inventory system. The inventories.
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S-A E  234(Communication) Jeff Franklin, a new employee of Bail Company, recorded $1,800 in consigned goods received as part of the firm's inventory. The goods were received one day after the end of the fiscal period, but Jeff reasoned that the goods should be included in inventory sooner because Bail paid.
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21.The reference column in a sales journal is used to indicate the general ledger account number when the entry is posted. 22.Postings are generally made more frequently to the general ledger control accounts than to the individual accounts in the subsidiary ledgers. 23.The amounts appearing in the Inventory column of the cash.
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21.Inventory turnover is calculated as cost of goods sold divided by ending inventory. a22.If a company uses the FIFO cost assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system. a23.In applying the LIFO assumption in a perpetual inventory system, the cost.
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MULTIPLE CHOICE QUESTIONS 32.The principle of an efficient accounting system that states that an accounting system should accommodate a variety of users is a.cost effectiveness. b.flexibility. c.useful output. d.implementation. 33.Which of the following is not a basic principle of designing and developing an effective accounting information system? a.Approval by the SEC b.Usefulness c.Flexibility d.Cost effectiveness 34.A company will usually replace a.
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MATCHING 226.Match the items below by entering the appropriate code letter in the space provided. A.Merchandise InventoryF.First-in, first-out (FIFO) method B.Work in processG.Last-in, first-out (LIFO) method C.FOB shipping pointH.Average-cost method D.FOB destinationI.Inventory turnover E.Specific identification methodJ.Current replacement cost ____              1.Measures the number of times the inventory sold during the period. ____              2.Tracks the actual physical flow for each.
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COMPLETION STATEMENTS               216.Accounting for inventories is important because inventories affect the ______________ section of the balance sheet and the ______________ section on the income statement.               217.In a manufacturing company, goods that are ready to be sold to customers are referred to as ________________, whereas in a merchandising company they are.
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Ex. 203 Galena Pharmacy reported cost of goods sold as follows:      2016       2017   Beginning inventory$   54,000$   64,000 Cost of goods purchased  847,000  891,000 Cost of goods available for sale901,000955,000 Ending inventory    64,000    55,000 Cost of goods sold$837,000$900,000 Jim Holt, the bookkeeper, made two errors: (1)2016 ending inventory was overstated by $7,000. (2)2017 ending inventory was understated by $16,000. Instructions Assuming the.
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11.A subsidiary ledger provides up-to-date information on specific account balances. 12.An advantage of using a subsidiary ledger is that one employee must post to both the subsidiary ledger and the general ledger. 13.Special journals are used to record unique transactions which do not occur very often. 14.A cash receipts journal can be used.
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Ex. 194 Pearl Company uses the periodic inventory system to account for inventories. Information related to Pearl Company's inventory at October 31 is given below: October1Beginning inventory400units @ $9.60 =$ 3,840 8Purchase800units @ $10.40 =8,320 16Purchase600units @ $10.80 =6,480 24Purchase   200units @ $11.80 =      2,360 Total units and cost2,000units$21,000 Instructions 1.Show computations to value the ending inventory.
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54.Cost of goods sold is computed from the following equation: a.beginning inventory – cost of goods purchased + ending inventory. b.sales – cost of goods purchased + beginning inventory – ending inventory. c.sales + gross profit – ending inventory + beginning inventory. d.beginning inventory + cost of goods purchased – ending inventory. 55.A company just.
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BRIEF EXERCISES BE 180 Weinstein Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should be included or excluded from the inventory taking. 1.Goods shipped on consignment by Weinstein to another company. 2.Goods in transit from a supplier shipped FOB destination. 3.Goods shipped via common carrier to a.
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Ex. 209 The following information is available for Heller Company: Beginning inventory$  60,000Cost of goods sold640,000Ending inventory100,000Sales revenue1,000,000 InstructionsCompute each of the following:(a)Inventory turnover.(b)Days in inventory. aEx. 210 Britt Company uses the perpetual inventory system and the LIFO method. The following information is available for the month of May: May1Beginning inventory20 units @ $6 10Purchase20 units @.
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BE 184 Mesa Company's inventory records show the following data for the month of September: UnitsUnit Cost Inventory, September 1100$3.35 Purchases:September 84503.50 September 183503.70               A physical inventory on September 30 shows 250 units on hand. Calculate the value of ending inventory and cost of goods sold if the company uses LIFO inventory costing and a.
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64.The cost of goods available for sale is allocated between a.beginning inventory and ending inventory. b.beginning inventory and cost of goods on hand. c.ending inventory and cost of goods sold. d.beginning inventory and cost of goods purchased. 65.Harpo's Used Cars uses the specific identification method of costing inventory. During March, Harpo purchased three cars for.
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Ex. 195 Ford Co. uses a periodic inventory system. Its records show the following for the month of May, in which 75 units were sold. UnitsUnit CostTotal Cost May   1  Inventory35$  8$  280 15  Purchases3012360 24  Purchases  4013    520 Totals105$1,160 InstructionsCompute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO.
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74.The cost of goods available for sale is allocated to the cost of goods sold and the a.beginning inventory. b.ending inventory. c.cost of goods purchased. d.gross profit. 75.At May 1, 2016, Bibby Company had beginning inventory consisting of 200 units with a unit cost of $7.  During May, the company purchased inventory as follows: 800 units.
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a144.Under the gross profit method, each of the following items are estimated except for the a.cost of ending inventory. b.cost of goods sold. c.cost of goods purchased. d.gross profit. a145.Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by a.net sales. b.goods available for sale at retail. c.goods purchased.
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104.If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the a.cost of goods sold of the companies will be identical. b.cost of goods available for sale of the companies will be identical. c.ending inventory of the companies will be identical. d.net.
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S-A E  229 Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year? S-A E 230 A survey of major.
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52.In which journal would a cash purchase of inventory be recorded? a.Purchases journal b.General journal c.Cash payments journal d.None of these answer choices are correct. 53.The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger a.daily. b.weekly. c.monthly. d.yearly. 54.A sales journal is used to record a.only cash sales of merchandise. b.sales of all assets on credit.
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134.The following information was available for Pietee Company at December 31, 2016: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $968,000; and sales $1,360,000. Pietee’s days in inventory in 2016 was a21.5 days. b.26.4 days. c.30.2 days. d.33.8 days. 135.Dulzura Company had beginning inventory of $60,000, ending inventory of $90,000, cost of goods.
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