Assuming periodic inventory procedure, what effect would an understatement of ending inventory have on the different items on the financial statements? Balance Sheet Income Statement Current Assets Cost of Goods Sold Total Assets Gross Margin Retained Earnings Net Income Total Liabilities and Retained Earnings Both __________-__________, __________-__________ and __________-__________, __________-__________ methods of inventory valuation are assumptions as to the flow of costs. Following is a summary of beginning inventory, purchases, and sales. At what amount would the inventory be priced assuming, the first-in, first-out method is used under perpetual invventory procedure? Beg. Inv., Jan. 1 2,400 units @ $8.80 Purchases: Jan. 8 5,600 units @ $9.00 Mar. 15 2,000 units @ $9.10 Jul. 28 2,800 units @ $9.50 Nov. 30 400 units @ $9.70 Sales: Feb. 13 3,000 units Jun. 9 2,800 units Sep. 22 1,400 units At what amount would the inventory in the preceding question be priced if the last-in, first-out method were used under perpetual inventory procedure? Under FIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold. Under LIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold, provided new units are acquired before the end of the accounting period. The principle argument for __________ is that this method more precisely matches costs and revenues in current terms. During a period of rising prices, __________ will give a higher net income figure. Below is a record of beginning inventory and purchases. Compute the ending inventory under the weighted-average method assuming periodic inventory procedure is a physical count showed 150 units on hand at the end of the month. Inventory on May 1 75 units @ $10.00 = $750.00 Purchases: May 10 50 units @ $10.50 = 525.00 May 15 25 units @ $10.30 = 257.50 May 25 100 units @ $10.10 = 1,010.00 250 $2,542.50 What is the cost of goods sold in the example in the preceding question? The lower-of-cost-or-market method uses market values only to the extent that these values are __________ than historical cost. The Mia Company has three different products in its inventory at December 31, 2007 which have costs and current market value as follows: Item Cost Market A $5,000 $5,500 B 15,000 14,750 C 12,500 12,875 If each product is priced at the lower-of-cost-or-market, the inventory is $__________. If the total is priced at the lower-of-cost-or-market, the inventory is $__________. To apply the gross margin method, the rate of gross margin on sales is multiplied by __________ __________ to arrive at gross margin. The gross margin is then subtracted from net sales to arrive at __________ __________ __________ __________ __________. This figure is then subtracted from __________ __________ __________ __________ __________ __________ to arrive at ending inventory. Use the following information and the retail inventory method to estimate the ending inventory at cost: Cost Retail Beginning inventory $44,000 $70,000 Purchases, net 550,000 920,000 Sales 900,000 The Computational Error Company reported net income of $240,000 and $270,000 for 2006 and 2007. It was discovered later that the ending inventory for 2006 was understated by $28,000. The net income for 2006 was __________, and the net income for 2007 was __________. A company began an accounting period with 100 units of an item that cost $7.50 each. During the period it purchased 400 units of the item at $9 each and it sold 390 units. In the spaces below give the costs assigned to the ending inventory and to goods sold under each of the three assumptions using periodic inventory procedures. Ending Inventory Cost of Goods Sold 1. The costs were assigned on a LIFO basis 2. The costs were assigned on a weighted-average cost basis 3. Costs were assigned on a FIFO basis Company A has the following financial information for 2007: Beginning inventory $230,000 Ending inventory $300,000 Cost of goods sold $175,000 The inventory turnover ratio is equal to __________. Assuming periodic inventory procedure, what effect would an understatement of ending inventory have on the different items on the financial statements? Balance Sheet Income Statement Current Assets Cost of Goods Sold Total Assets Gross Margin Retained Earnings Net Income Total Liabilities and Retained Earnings Both __________-__________, __________-__________ and __________-__________, __________-__________ methods of inventory valuation are assumptions as to the flow of costs. Following is a summary of beginning inventory, purchases, and sales. At what amount would the inventory be priced assuming, the first-in, first-out method is used under perpetual invventory procedure? Beg. Inv., Jan. 1 2,400 units @ $8.80 Purchases: Jan. 8 5,600 units @ $9.00 Mar. 15 2,000 units @ $9.10 Jul. 28 2,800 units @ $9.50 Nov. 30 400 units @ $9.70 Sales: Feb. 13 3,000 units Jun. 9 2,800 units Sep. 22 1,400 units At what amount would the inventory in the preceding question be priced if the last-in, first-out method were used under perpetual inventory procedure? Under FIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold. Under LIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold, provided new units are acquired before the end of the accounting period. The principle argument for __________ is that this method more precisely matches costs and revenues in current terms. During a period of rising prices, __________ will give a higher net income figure. Below is a record of beginning inventory and purchases. Compute the ending inventory under the weighted-average method assuming periodic inventory procedure is a physical count showed 150 units on hand at the end of the month. Inventory on May 1 75 units @ $10.00 = $750.00 Purchases: May 10 50 units @ $10.50 = 525.00 May 15 25 units @ $10.30 = 257.50 May 25 100 units @ $10.10 = 1,010.00 250 $2,542.50 What is the cost of goods sold in the example in the preceding question? The lower-of-cost-or-market method uses market values only to the extent that these values are __________ than historical cost. The Mia Company has three different products in its inventory at December 31, 2007 which have costs and current market value as follows: Item Cost Market A $5,000 $5,500 B 15,000 14,750 C 12,500 12,875 If each product is priced at the lower-of-cost-or-market, the inventory is $__________. If the total is priced at the lower-of-cost-or-market, the inventory is $__________. To apply the gross margin method, the rate of gross margin on sales is multiplied by __________ __________ to arrive at gross margin. The gross margin is then subtracted from net sales to arrive at __________ __________ __________ __________ __________. This figure is then subtracted from __________ __________ __________ __________ __________ __________ to arrive at ending inventory. Use the following information and the retail inventory method to estimate the ending inventory at cost: Cost Retail Beginning inventory $44,000 $70,000 Purchases, net 550,000 920,000 Sales 900,000 The Computational Error Company reported net income of $240,000 and $270,000 for 2006 and 2007. It was discovered later that the ending inventory for 2006 was understated by $28,000. The net income for 2006 was __________, and the net income for 2007 was __________. A company began an accounting period with 100 units of an item that cost $7.50 each. During the period it purchased 400 units of the item at $9 each and it sold 390 units. In the spaces below give the costs assigned to the ending inventory and to goods sold under each of the three assumptions using periodic inventory procedures. Ending Inventory Cost of Goods Sold 1. The costs were assigned on a LIFO basis 2. The costs were assigned on a weighted-average cost basis 3. Costs were assigned on a FIFO basis Company A has the following financial information for 2007: Beginning inventory $230,000 Ending inventory $300,000 Cost of goods sold $175,000 The inventory turnover ratio is equal to __________. Assuming periodic inventory procedure, what effect would an understatement of ending inventory have on the different items on the financial statements? Balance Sheet Income Statement Current Assets Cost of Goods Sold Total Assets Gross Margin Retained Earnings Net Income Total Liabilities and Retained Earnings Both __________-__________, __________-__________ and __________-__________, __________-__________ methods of inventory valuation are assumptions as to the flow of costs. Following is a summary of beginning inventory, purchases, and sales. At what amount would the inventory be priced assuming, the first-in, first-out method is used under perpetual invventory procedure? Beg. Inv., Jan. 1 2,400 units @ $8.80 Purchases: Jan. 8 5,600 units @ $9.00 Mar. 15 2,000 units @ $9.10 Jul. 28 2,800 units @ $9.50 Nov. 30 400 units @ $9.70 Sales: Feb. 13 3,000 units Jun. 9 2,800 units Sep. 22 1,400 units At what amount would the inventory in the preceding question be priced if the last-in, first-out method were used under perpetual inventory procedure? Under FIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold. Under LIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold, provided new units are acquired before the end of the accounting period. The principle argument for __________ is that this method more precisely matches costs and revenues in current terms. During a period of rising prices, __________ will give a higher net income figure. Below is a record of beginning inventory and purchases. Compute the ending inventory under the weighted-average method assuming periodic inventory procedure is a physical count showed 150 units on hand at the end of the month. Inventory on May 1 75 units @ $10.00 = $750.00 Purchases: May 10 50 units @ $10.50 = 525.00 May 15 25 units @ $10.30 = 257.50 May 25 100 units @ $10.10 = 1,010.00 250 $2,542.50 What is the cost of goods sold in the example in the preceding question? The lower-of-cost-or-market method uses market values only to the extent that these values are __________ than historical cost. The Mia Company has three different products in its inventory at December 31, 2007 which have costs and current market value as follows: Item Cost Market A $5,000 $5,500 B 15,000 14,750 C 12,500 12,875 If each product is priced at the lower-of-cost-or-market, the inventory is $__________. If the total is priced at the lower-of-cost-or-market, the inventory is $__________. To apply the gross margin method, the rate of gross margin on sales is multiplied by __________ __________ to arrive at gross margin. The gross margin is then subtracted from net sales to arrive at __________ __________ __________ __________ __________. This figure is then subtracted from __________ __________ __________ __________ __________ __________ to arrive at ending inventory. Use the following information and the retail inventory method to estimate the ending inventory at cost: Cost Retail Beginning inventory $44,000 $70,000 Purchases, net 550,000 920,000 Sales 900,000 The Computational Error Company reported net income of $240,000 and $270,000 for 2006 and 2007. It was discovered later that the ending inventory for 2006 was understated by $28,000. The net income for 2006 was __________, and the net income for 2007 was __________. A company began an accounting period with 100 units of an item that cost $7.50 each. During the period it purchased 400 units of the item at $9 each and it sold 390 units. In the spaces below give the costs assigned to the ending inventory and to goods sold under each of the three assumptions using periodic inventory procedures. Ending Inventory Cost of Goods Sold 1. The costs were assigned on a LIFO basis 2. The costs were assigned on a weighted-average cost basis 3. Costs were assigned on a FIFO basis Company A has the following financial information for 2007: Beginning inventory $230,000 Ending inventory $300,000 Cost of goods sold $175,000 The inventory turnover ratio is equal to __________.