Question
On January 29, 2021, Verdi Corporation sold and shipped merchandise to KBA, Inc. for $400,000 on credit. Goods were shipped FOB destination and arrived at
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On January 29, 2021, Verdi Corporation sold and shipped merchandise to KBA, Inc. for $400,000 on credit. Goods were shipped FOB destination and arrived at KBA warehouse on February 2. Which of the following statements is true?
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Verdi Corporation includes the $400,000 as part of its January 31 Inventory balance.
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KBA, Inc. includes the $400,000 as part of its January 31 Inventory balance.
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Both companies include the $200,000 as part of their January 31 Inventory balances.
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The goods are in transit on January 31 so neither company includes the $400,000 as part of its January 31 Inventory balance.
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Cozy Corporation uses a periodic inventory system. When Cozy's manager counts its inventory on December 31, 2021, he accidentally forgets to count one pile of blankets, resulting in 2021 ending inventory being understated by $80,000. The manager counts the December 31, 2022 inventory correctly. Which of the following statements is true related to Cozy Corporation's 2021 and 2022 financial statements?
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2022 Beginning Inventory will be overstated by $80,000.
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2022 Cost of Goods Sold will be understated by $80,000.
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2021 Cost of Goods Sold will be understated by $80,000.
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Both a and b are true.
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All of the above are true.
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In a period of rising prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?
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Weighted Average Cost
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FIFO
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LIFO
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Cannot tell without more information
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