Financial Accounting
4th Edition
ISBN: 9781259307959
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 6, Problem 6.2BE
To determine
To match: Each inventory classifications with its definition.
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Choose and explain:
a. P4,270,000
b. 4,170,000
Why defective materials returned to suppliers for replacement is not part of the computation for the cost of inventory?
H7.
For the same transactions, why does the weighted-average cost method provide different value for ending inventory and COGS depending on whether the periodic or perpetual inventory system is used?
Select one: a. Perpetual inventory calculates and assigns costs as items are sold, while periodic inventory calculates and assigns costs at the end of the period.
b. Perpetual inventory calculates and assigns costs at the end of the period, while periodic inventory calculates and assigns costs as items are sold.
c. Perpetual inventory counts all the purchases for the month first before calculating the average cost, while periodic calculates the average cost after every transaction.
d. Perpetual inventory and periodic inventory will not provide different values using
Explain also wrong options and explain with details
12.Which of the following statements is correct regarding the direct method of accounting for any write down of inventories to its net realizable value (NRV)?
a. An Allowance to Reduce Inventory to Net Realizable Value account is used to record inventory at the lower of cost and NRV.
b. The beginning and ending inventories are measured at the lower of cost and NRV when determining the cost of goods sold for the period.
c. The beginning and ending inventories are measured at cost when determining the cost of goods sold for the period.
d. The decline in NRV of inventory is reported as an other expense while recovery in NRV of inventory is reported as an other income.
Chapter 6 Solutions
Financial Accounting
Ch. 6 - 1.What is inventory? Where in the financial...Ch. 6 - Prob. 2RQCh. 6 - What is the difference among raw materials...Ch. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - What is a multiple-step income statement? What...Ch. 6 - Cheryl believes that companies report cost of...Ch. 6 - What are the three primary cost flow assumptions?...Ch. 6 - 9.Which cost flow assumption generally results in...Ch. 6 - Prob. 10RQ
Ch. 6 - Prob. 11RQCh. 6 - 12.Explain how LIFO generally results in lower...Ch. 6 - Prob. 13RQCh. 6 - Explain how freight charges, purchase returns, and...Ch. 6 - Explain the method of reporting inventory at lower...Ch. 6 - 16.How is cost of inventory determined? How is net...Ch. 6 - 17.Describe the entry to adjust from cost to net...Ch. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - How is gross profit calculated? What is the gross...Ch. 6 - 21.Explain how the sale of inventory on account is...Ch. 6 - Prob. 22RQCh. 6 - Prob. 23RQCh. 6 - Prob. 24RQCh. 6 - Understand terms related to types of companies...Ch. 6 - Prob. 6.2BECh. 6 - Calculate cost of goods sold (LO62) At the...Ch. 6 - Prob. 6.4BECh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.8BECh. 6 - Identify financial statement effects of FIFO and...Ch. 6 - Prob. 6.10BECh. 6 - Record freight charges for inventory using a...Ch. 6 - Record purchase returns of inventory using a...Ch. 6 - Prob. 6.13BECh. 6 - Prob. 6.14BECh. 6 - Prob. 6.15BECh. 6 - Prob. 6.16BECh. 6 - Prob. 6.17BECh. 6 - Prob. 6.18BECh. 6 - Record purchase returns of inventory using a...Ch. 6 - Refer to the information in BE613, but now assume...Ch. 6 - Prob. 6.21BECh. 6 - Prob. 6.22BECh. 6 - Calculate cost of goods sold (LO62) Russell Retail...Ch. 6 - Prob. 6.2ECh. 6 - Prob. 6.3ECh. 6 - Calculate inventory amounts when costs are rising...Ch. 6 - Calculate inventory amounts when costs are...Ch. 6 - Record Inventory transactions using o perpetual...Ch. 6 - Record inventory purchase and purchase return...Ch. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Record transactions using a perpetual system...Ch. 6 - Record transactions using a perpetual system...Ch. 6 - Calculate inventory using lower of cost and net...Ch. 6 - Prob. 6.14ECh. 6 - Calculate cost of goods sold, the inventory...Ch. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Prob. 6.18ECh. 6 - Record inventory purchases and sales using a...Ch. 6 - Mulligan Corporation purchases inventory on...Ch. 6 - Complete the accounting cycle using Inventory...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.4APCh. 6 - Calculate ending inventory end cost of goods sold...Ch. 6 - Record transactions using a perpetual system,...Ch. 6 - Prob. 6.7APCh. 6 - Prob. 6.8APCh. 6 - Record transactions and prepare a partial income...Ch. 6 - Prob. 6.10APCh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2BPCh. 6 - Prob. 6.3BPCh. 6 - Prob. 6.4BPCh. 6 - Prob. 6.5BPCh. 6 - Record transactions using a perpetual system,...Ch. 6 - Prob. 6.7BPCh. 6 - Use the inventory turnover retio end gross profit...Ch. 6 - Record transactions and prepare a partial income...Ch. 6 - Determine the effects of inventory errors using...Ch. 6 - Great Adventures (This is a continuation of the...Ch. 6 - Prob. 6.2APFACh. 6 - Prob. 6.3APFACh. 6 - Comparative Analysis American Eagle Outfitters,...Ch. 6 - Prob. 6.5APECh. 6 - Prob. 6.6APIRCh. 6 - Written Communication You have just been hired as...Ch. 6 - Prob. 6.8APEM
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- In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases using LCNRV. Cases 00100 00200 00300 00400 00500 Cost $15.90 $16.10 $15.90 $15.90 $15.90 Sales value 14.80 19.20 15.20 10.40 17.80 Estimated cost to complete 1.50 1.90 1.65 .80 1.00 Estimated cost to sell .50 .70 .55 .40 .60arrow_forwardPlease refer to the picture below for information. Kindly use a Table in showing the complete solution. Thank you so much. Question: What is the impairment loss to be allocated to Inventory? a. P717,391.30 b. P513,157.89 c. P204,233.41 d. P0arrow_forward26) Which of the following is a similarity between GAAP and IFRS with respect to accounting for inventories? a)Both standards use a ceiling or a floor to determine lower-of-cost-or-market. b)Both standards allow for reversals of write downs. c) The use of more principles based guidelines exist under both IFRS and GAAP standards. d) Inventory acquisitions are accounted for at historical cost.arrow_forward
- 1. Which of the following are prohibited when accounting for inventory under U.S. GAAP? a. FIFO method b. Average cost method c. Recovery of written down inventory d. LIFO method 2. Under IFRS GAAP research costs and development costs (when product technologically and economically feasible) are a. both capitalized b. both expensed c. research costs are expensed and development costs are capitalized d. research costs are capitalized and development costs are expensedarrow_forward0. The inventory evaluation method which does not represent the actual ending inventory value is? a. standard cost b. first-in, first-out (FIFO) c. weighted average d. last-in, first-out (LIFO)arrow_forward63. According to the GAM for NGAs, this shall be used for large numbers of items of inventory that are ordinarily interchangeable Specific Identification FIFO Weighted average cost applied in a periodic inventory system Weighted average cost applied in a perpetual inventory system Any of these as a matter of accounting policy choicearrow_forward
- Match each of the following inventory classifications with its definition. Inventory Classifications Definitions Inventory Classifications Definitions 1. Raw materials 2. Work-in-process 3. Finished goods a. Cost of items not yet complete by the end of theperiod.b. Inventory that has been substantially completed.c. Basic components used to build a product.arrow_forward34.Which of the following statements is correct? a. Accounting for materials under FIFO is different when the entity is using the periodic inventory system and perpetual inventory system. b. Average method applied to periodic inventory system necessitates the computation of revised unit cost after every purchase. c. Average perpetual uses a single average unit cost of materials d. Total cost of materials available for use is the same whether the company is using FIFO or Average Method.arrow_forwardLO1 If the ending inventory is overstated by 10,000, indicate what, if anything, is incorrect about the following: Cost of goods sold___________ Gross profit___________ Net income___________ Ending owners capital___________arrow_forward
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