Chapter 06 – Inventories
Copyright Cengage Learning. Powered by Cognero.
Page 111
(2) 37.56 days
d.
(1) 10.53 times
(2) 34.56 days
ANSWER:
b
RATIONALE:
(1) Inventory turnover = Cost of goods sold/Average inventory
Inventory turnover = $894,000/[($78,000 + $92,000)/2]
Inventory turnover = 10.52
(2) Number of days’ sales in inventory = Average inventory/Average daily cost of
goods sold
Number of days’ sales in inventory = $85,000/($894,000/365)
Number of days’ sales in inventory = 34.70 days
POINTS:
1
DIFFICULTY:
Bloom’s Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-07 – LO: 06–07
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
10/4/2017 6:48 PM
DATE MODIFIED:
10/16/2017 5:09 PM
226. Based on the following information, what is (1) inventory turnover; (2) average daily cost of goods sold using a 365
day year; and (3) number of days’ sales in inventory.
Cost of goods sold $195,640
Inventory:
Beginning of year 20,500
End of year 18,628
a.
(1) 9.9 times
(2) $543.44
(3) 36.3 days
b.
(1) 10.5 times
(2) $536
(3) 34.8 day
c.
(1) 9.5 times
(2) $543.44
(3) 37.7 days
d.
(1) 10 times
(2) $536
(3) 36.5 days
ANSWER:
d
RATIONALE:
(1) $195,640 ÷ [($20,500 + 18,628)/2] = $195,640 ÷ $19,564 = 10
(2) $195,640 ÷ 365 = $536
(3) $19,564 ÷ $536 = 36.5 days
POINTS:
1
Chapter 06 – Inventories
Copyright Cengage Learning. Powered by Cognero.
Page 113
a.
$400
b.
$450
c.
$500
d.
$600
ANSWER:
c
RATIONALE:
With LIFO, all the units sold would come from the Sep. 10 purchase; so the cost of
goods sold would be $25 20 units = $500
POINTS:
1
DIFFICULTY:
Bloom’s Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Addison, Inc.
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-03 – LO: 06–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
10/4/2017 7:23 PM
DATE MODIFIED:
10/16/2017 5:09 PM
229. Use the information in the table to answer this question. If Addison uses the weighted average cost method, what is the
inventory balance at the end of September?
a.
$1,150.00
b.
$1,187.50
c.
$1,375.00
d.
$1,500.00
ANSWER:
c
RATIONALE:
Weighted average is calculated after each purchase.
Weighted average after Sep. 1 purchase = $20
Weighted average after Sep. 10 purchase = $23.75
Weighted average after Sep. 30 purchase = $27.50
50 units in inv. at Sep. 30 $27.50 = $1,375.00
POINTS:
1
DIFFICULTY:
Bloom’s Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Addison, Inc.
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-03 – LO: 06–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
10/4/2017 7:29 PM
DATE MODIFIED:
10/16/2017 5:09 PM
Copyright Cengage Learning. Powered by Cognero.
Page 114
230. Use the information in the table to answer this question. If Addison uses the weighted average cost method, calculate
the inventory balance at the end of September?
ANSWER:
$1,375.00
RATIONALE:
Weighted average is calculated after each purchase.
Weighted average after Sep. 1 purchase = $20
Weighted average after Sep. 10 purchase = $23.75
Weighted average after Sep. 30 purchase = $27.50
50 units in inv. at Sep. 30 $27.50 = $1,375.00
POINTS:
1
DIFFICULTY:
Bloom’s Applying
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
PREFACE NAME:
Addison, Inc.
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-03 – LO: 06–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
10/4/2017 7:35 PM
DATE MODIFIED:
10/16/2017 5:09 PM
The inventory data for an item for November are:
Nov. 1 Inventory 20 units at $19
4 Sold 10 units
10 Purchased 30 units at $20
17 Sold 20 units
30 Purchased 10 units at $22
231. Use the information in the table to answer this question. Using a perpetual system, what is the cost of the goods sold
for November if the company uses the weighted average cost method?
a.
$610
b.
$585
c.
$590
d.
$575
ANSWER:
b
RATIONALE:
The cost of the goods sold for November using weighted average is 10 units sold on
November 4 at $19 + 20 units sold on November 17 at $19.75 = $585.
The weighted average of each unit on Nov. 10 is (10 units $19) + (30 units $20) /
40 units = $19.75 per unit.
The 20 units sold on November 17 use the $19.75 weighted average cost.
POINTS:
1
DIFFICULTY:
Bloom’s Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
November inventory data
Chapter 06 – Inventories
Copyright Cengage Learning. Powered by Cognero.
Page 119
Purchases
Cost of
Goods Sold
Inventory
Date
Qty.
Unit Cost
Total Cost
Qty.
Unit Cost
Total
Cost
Qty.
Unit
Cost
Total
Cost
Balances
ANSWER:
Purchases
Cost of
Goods Sold
In
Date
Qty.
Unit Cost
Total
Cost
Qty.
Unit Cost
Total
Cost
Qty.
U
April 3
12
11
13
$47
$611
25
14
18
$46.04
$828.72
7
21
9
60
540
16
25
10
53.89
538.93
6
Balances
$1,367.65
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVE
S:
FNMN.WAJO.19.06-03 – LO: 06–03
ACCREDITING STANDA
RDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
10/4/2017 8:43 PM
DATE MODIFIED:
10/16/2017 5:09 PM