ADMS 2510 Study Guide - Inventory Turnover, Baddeck, Gross Margin

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raspberryswan810

12 Apr 2014

School

York University

Department

Administrative Studies

Course

ADMS 2510

Professor

John Parkinson

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ADMS 2510 Full Course Notes

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The inventory on the december 31, 2014 balance sheet is overstated by ,000 and on the income statement cost of goods sold will be understated by ,000 and net income will be overstated by ,000. With a periodic system cost of goods sold is determined using the equation: Cost of goods sold = beginning inventory + purchases ending inventory. If as a result of the count ending inventory is overstated then cost of goods sold must be understated. The company had an opening balance of 300 units, and purchased an additional 800 units for a total of 1100 units. Chetwynd sold 500 units, leaving 600 units in ending inventory. The sum of the amount expensed and ending inventory is off by sh. 40 due to rounding the average price per unit. The company had an opening balance of 5,500 units, and purchased an additional 14,800 units for a total of 20,300 units.

Related Questions

Poppy Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,000, and its ending inventory on December 31 was understated by $17,000. In addition, a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase. None of these errors were discovered until the next year. As a result:

Required: Using the information given in the first paragraph of this problem, read each statement and circle either UNDERSTATED or OVERSTATED as the effect of the error. Also calculate the total effect on cost of goods sold and put it in a blank in statement D.

A. Poppy's cost of goods sold for this year was UNDERSTATED or OVERSTATED because of beginning inventory.

B. Poppy's cost of goods sold for this year was UNDERSTATED or OVERSTATED because of ending inventory.

C. Poppy's cost of goods sold for this year was UNDERSTATED or OVERSTATED because of purchases.

D. Total cost of goods sold for this year was UNDERSTATED or OVERSTATED by_________.

E. Net income for this year was UNDERSTATED or OVERSTATED.

aquamarineguinea-pig855

Select the following sentences to the inventory cost flowmethod they describe.

Answers: net income for the year will be overstated, net income forthe year will be understated or net income for the year will not beaffected.

1. Merchandise was purchased FOB shipping point onthe last day of the year. The cost of the merchandise purchased wasnot included in ending inventory.	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 1
2. Merchandise was purchased FOB destination onthe last day of the year. The cost of the merchandise purchased wasnot included in ending inventory.	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 2
3. Merchandise held on consignment was included inthe count of ending inventory.	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 3
4. A consignor included merchandise in the handsof the consignee in ending inventory.	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 4
5. Beginning inventory was understated due to anerror in last year's inventory count.	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 5
6. Merchandise that was sold and shipped FOBdestination on the last day of the year was not included in theseller's ending inventory..	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 6
7. Merchandise that was sold and shipped FOBshipping point on the last day of the year was not included in theseller's ending inventory.	SelectNet income for the current year will be overstated. Netincome for the current year will be understated. Net income for thecurrent year will not be affected. Item 7
8. Last year's ending inventory was recorded as$10,000. The actual inventory on hand the end of last year was$12,000.

lilacrabbit105

Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2018 is available:


Aug.1	Inventory on handâ2,000 units;cost $6.10 each.
8	Purchased 10,000 units for $5.50each.
14	Sold 8,000 units for $12.00each.
18	Purchased 6,000 units for $5.00each.
25	Sold 7,000 units for $11.00each.
31	Inventory on handâ3,000 units

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using each of thefollowing cost flow methods.

FIFO

LIFO

Average Cost

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using the FIFO method.(Round "Cost per Unit" to 2 decimal places.)

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
FIFO	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost perunit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
BeginningInventory	2,000	$6.10	$12,200	2,000	$6.10	$12,200		$6.10	$0
Purchases:
August 8	10,000	$5.50	55,000	10,000	$5.50	55,000		$5.50	0
August 18	6,000	$5.00	30,000	3,000	$5.00	15,000		$5.00
Total	18,000		$97,200	15,000		$82,200	0		$0

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using LIFO method.(Round "Cost per Unit" to 2 decimal places.)

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
LIFO	# ofunits	Cost perunit	Cost ofGoods Available for Sale	# of unitssold	Cost perunit	Cost ofGoods Sold	# of unitsin ending inventory	Cost perunit	EndingInventory
Beginning Inventory	2,000	$6.10	$12,200		$6.10	$0		$6.10
Purchases:
August 8					$0.00			$0.00
August 18					$0.00			$0.00	0
Total	2,000		$12,200	0		$0	0		$0

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using Average costmethod. (Round "Average Cost per Unit" to 2 decimal places.)

AverageCost	Cost ofGoods Available for Sale			Cost ofGoods Sold - Average Cost			EndingInventory - Average Cost
AverageCost	# of units	Unit Cost	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory
Purchases:
August 8
August 18
Total	0		$0			$0			$0

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ADMS 2510 Study Guide - Inventory Turnover, Baddeck, Gross Margin

ADMS 2510 Full Course Notes

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