Review Exercises7-41M7-8Assuming no beginning inventory, what can be saidabout the trend of inventory prices if cost of goodssold computed when inventory is valucd using theFIFO method exceeds cost of goods sold wheninventory is valued using the LIFO method?Under the dollar-value LIFO inventory method,Kern's inventory method, Kern's inventory onDecember 31, 2016, would be:LO 7.5a. $650,000b. $655,000c. $660,000d. $720,000a. Prices decreased.When the double-extension approach to thedollar-value LIFO inventory cost flow method isused, the inventory layer added in the current yearis multiplied by an index number. How would thefollowing be used in the calculation of this indexnumber?M7-10b. Prices remained unchanged.c. Prices increased.d. Price trend cannot be determined frominformation given.LO 7.7On December 31, 2015, Kern Company adoptedthe dollar-value LIFO inventory method. All ofKern's inventories constitute a single pool. Theinventory on Dccember 31, 2015, using the dollar-value LIFO inventory method was $600,000.Inventory data for 2016 are as follows:M7-9LO 7.7Ending Inventory atCurrent-Year CostEnding Inventory atBase-Year CostNumeratorDenominatorNot Useda.NumeratorDenominatorNot UsedC.NumeratorDec. 31, 2016 inventory at year-endpricesRelevant cost index at year-end (baseyear 2015)Denominator$780,000120

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item as shown in Exhibit below. Item Inventory Quantity Unit Cost Price ($) Unit Market Price ($) MT22 1642 91 88 4WY09 5278 37 44 1GDS 8898 185 172
If beginning inventory is understated by $11800, the effect of this error in the current period is Cost of Goods Sold Net Income Net Income overstated understated understated overstated understated understated overstated overstated
Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exh Inventory Inventory Cost per Market Value per Unit Item Quantity Unit (Net Realizable Value) Birch 28 $82 $68 Cypress 8 137 128 Mountain Ash 48 106 102 Spruce 10 135 155 Willow 18 80 93 Inventory at the Lower of Cost or Market Inventory Item Total Cost Total Market Total Lower of C or M Birch Cypress Mountain Ash Spruce Willow Total
On the basis of the data shown below: Inventory Cost per Market Value per Unit Item Quantity Unit (Net Realizable Value) МX62 80 $42 $40 05T4 155 20 23 Determine the value of the inventory at the lower of cost or market by applying lower of cost or market to each inventory item, as shown in Exhibit 9. $ 6,925 x
Lower-of-cost-or-market method On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10. Commodity InventoryQuantity Cost perUnit Market Value per Unit(Net Realizable Value) JFW1 53 $39 $34 SAW9 108 19 23 fill in the blank 1 of 1$
Lower-of-cost-or-market method On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10. Commodity InventoryQuantity Cost perUnit Market Value per Unit(Net Realizable Value) JFW1 78 $58 $55 SAW9 148 28 33
Lower-of-Cost-or-Market Method On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10. Market Value per Unit Item Inventory Quantity Cost per Unit (Net Realizable Value) JFW1 150 $27 $31 SAW9 314 14 10 Feedback
Question: Which of the following inventory valuation methods typically results in higher ending inventory value during periods of rising prices? A) FIFO (First-In-First-Out) method B) LIFO (Last-In-First-Out) method C) Weighted Average method D) Specific Identification method
Lower-of-Cost-or-Market Method On the basis of the data shown below: Inventory Item Quantity Cost per Unit Market Value per Unit (Net Realizable Value) JFW1 5,750 $9 $10 SAW9 1,040 27 24 Determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item, as shown in Exhibit 9. 76,710
Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. b.The FIFO assumption is not affected by the inventory control method. c.In periods of rising prices it produces a higher profit than LIFO. d.The FIFO assumption produces inventory asset values that are based on older purchase costs.

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