The next two questions use the following facts. Oceanview Software began January with $3,500 of merchandise inventory. During January, Oceanview made the following entries for its inventory transactions:
How much was Oceanview’s inventory at the end of January?
$5,400
Zero
$4,400
$2,200
What was Oceanview’s gross profit for January?
$7,600
When does the cost of inventory become an expense?
When inventory is delivered to a customer
When inventory is purchased from the supplier.
When cash is collected from the customer.
When payment is made to the supplier.
If Marble Frame uses the FIFO method, the cost of the ending inventory will be
$39,000.
$36,160.
$36,260.
$36,000.
If Marble Frame uses the LIFO method, cost of goods sold will be
$22,600.
$22,760.
$22,500.
$19,760.
. In a period of rising prices
Gross profit under FIFO will be higher than under LIFO.
. b. LIFO inventory will be greater than FIFO inventory.
Net income under LIFO will be higher than under FIFO.
Cost of goods sold under LIFO will be less than under FIFO.
The Income Statement for Feel Good Health Foods shows gross profit of $154,000, operating expenses of $128,000, and cost of goods sold of $213,000. What is the amount of net sales revenue?
$367,000
341,000
$495,000
$341,000
When the inventory cost is lower than NRV, the inventory should be reported at
. market price of inventory
replacement of inventory
selling price of inventory less cost to sell
acquisition cost of inventory.
The sum of (a) ending inventory and (b) cost of goods sold is
goods available.
beginning inventory
gross profit.
net purchases.
The following data come from the inventory records of Draper Company: Based on these facts, the gross profit for Dapper Company is
. $152,000.
$175,000.
$129,000
. Some other amount
Ellen Braun Cosmetics ended the month of May with inventory of $26,000. Ellen Braun expects to end June with inventory of $14,000 after cost of goods sold of $103,000. How much inventory must Ellen Braun purchase during June in order to accomplish these results?
$89,000
$91,000
$115,000
Cannot be determined from the data given
Two financial ratios that clearly distinguish a discount chain such as Kmart from a high-end retailer such as Saks Fifth Avenue are the gross profit percentage and the rate of inventory turnover. Which set of relationships is most likely for Saks Fifth Avenue?
Gross profit percentage : Low Inventory turnover: low
Gross profit percentage: Low Inventory turnover: High
Gross profit percentage: High Inventory turnover: Low
Gross Profit Percentage: High Inventory turnover: High
Sales are $540,000 and cost of goods sold is $330,000. Beginning and ending inventories are $29,000 and $34,000, respectively. How many times did the company turn its inventory over during this period?
17.1 times
. 6.7 times
7.2 times
10.5 times
Kruger, Inc., reported the following data:
Kruger’s gross profit percentage is
. 46.1
51.7.
. 47.7
50.0
Shailene Wood Company had the following beginning inventory, net purchases, net sales, and gross profit percentage for the first quarter of 20X6
By the gross profit method, the ending inventory should be
$74,000.
$76,000.
$81,000.
$79,000.
An error understated Regan Corporation’s December 31, 20X6, ending inventory by $42,000. What effect will this error have on total assets and net income for 20X6?
Assets: Understate Net Income: Understate
Assets: No Effect Net income: Overstate
Assets: Understate Net income: No effect
Assets: No effect Net income: No effect
. An error understated Regan Corporation’s December 31, 20X6, ending inventory by $42,000. What effect will this error have on net income for 20X7?
Understate
. Overstate
No effect
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