The following questions are used in the Kaplan CPA Review Course to study inventory while preparing for

Question:

The following questions are used in the Kaplan CPA Review Course to study inventory while preparing for the CPA examination. Determine the response that best completes the statements or questions.
1. Herc Co.'s inventory at December 31, 2011, was $1,500,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
• Merchandise costing $90,000, shipped f.o.b shipping point from a vendor on December 30, 2011, was received and recorded on January 5, 2012.
• Goods in the shipping area were excluded from inventory although shipment was not made until January 4, 2012. The goods, billed to the customer f.o.b. shipping point on December 30, 2011, had a cost of $120,000.

What amount should Herc report as inventory in its December 31, 2011, $1,500,000
b. $1,590,000
c. $1,700,000
d. $1,710,000

2. Dixon Menswear Shop regularly buys shirts from Colt Company. Dixon purchased shirts from Colt on May 27, and received an invoice with a list price amount of $3,600 and payment terms of 2/10, n/30. Dixon uses the net method to record purchases. Dixon should record the purchase at
a. $3,430
b. $3,500
c. $3,528
d. $3,600

Questions 3 through 5 are based on the following information. Esquire Corp. uses the periodic inventory system. During its first year of operations, Esquire made the following purchases (list in chronological order of acquisition):
• 20 units at $50
• 35 units at $40
• 85 units at $30
Sales for the year totaled 135 units, leaving 5 units on hand at the end of the year.

3. using the average cost method is
a. $ 150
b. $ 177
c. $ 250
d. $1,540

4. using the FIFO method is
a. 150
b. $ 177
c. $ 250
d. $1,540

5. using the LIFO method is
a. $ 150
b. $ 177
c. $ 250
d. $1,540

6. Jamison Corporation's inventory cost in its is lower using the first-in, first-out method than it would have been had it used the last-in, first-out method. Assuming no beginning inventory, what direction did the cost of purchases move during the period?
a. Up.
b. Down.
c. Unchanged.
d. Can't be determined.

7. Dalton Company adopted the dollar-value LIFO inventory method on January 1, 2011. In applying the LIFO method, Dalton uses internal price indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 1 for the two years following the adoption of LIFO:

Under the dollar-value LIFO method the inventory at December 31, 2012, should be
a. $128,000
b. $129,800
c. $130,800
d. $140,800

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...