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GSU ACCT 2101 - Chapter 6 Webex Copy

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Farley Bains, an auditor with Nolls CPAs, is performing a review of Ryder Company's Inventory account. Ryder did not have a good year, and top management is under pressureto boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount.1. Included in the company's count were goods with a cost of $228,000 that the company is holding on consignment. The goods belong to Nader Corporation.2. The physical count did not include goods purchased by Ryder with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder's warehouse until January 3.3. Included in the Inventory account was $17,000 of officesupplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year.4. The company received an order on December 29 that was boxed and was sitting on the loading dock awaitingpick-up on December 31. The shipper picked up the goods on January 1 and delivered them on January 6. The shipping terms were FOB shipping point. The goods had a selling price of $40,000 and a cost of $29,000. The goods were not included in the count because they were sitting on the dock.5. Included in the count was $50,000 of goods that were parts for a machine that the company no longer made. Giventhe high-tech nature of Ryder's products, it was unlikely thatthese obsolete parts had any other use. However, management would prefer to keep them on the books at cost,“since that is what we paid for them, after all.”Inventory $514,000Jeters Company uses a periodic inventory system and reports the following for the month of June. Compute inventory and cost of goods sold using periodic FIFO, LIFO,and average-cost.Date Explanation Units Unit Cost TotalCostJune 1 Inventory 120 $5 $600June 12 Purchase 370 $6 $2,220June 23 Purchase 200 $7 $1,400June 30 Inventory 230 Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost. (Round average unit cost to three decimal places.) FIFO: ending inventory $1,580, COGS $2,640 LIFO: ending inventory $1,260, COGS $2,960Avg. Cost: ending inventory $1,407, COGS $2,813Which of the following should not be included inthe physical inventory of a company?a. Goods held on consignment from anothercompany.b.Goods in transit from another company shippedFOB shipping point.c. Goods shipped on consignment to anothercompany.d.All of these answer choices should be included.Charlene Cosmetics Company just beganbusiness and made the following four inventorypurchases in June:June1 150 units $ 780June10 200 units 1,170June15 200 units 1,260June28 150 units 990$4,200A physical count of merchandise inventory onJune 30 reveals that there are 210 units on hand.Using the average cost method, the amountallocated to the ending inventory on June 30 isa. $1,229.b.$1,368.c. $1,323.d.$1,260.Two companies report the same cost of goodsavailable for sale but each employs a differentinventory costing method. If the cost of goods hasincreased during the period, then the companyusinga. LIFO will have the highest ending inventory.b.FIFO will have the highest cost of goods sold.c. FIFO will have the highest ending inventory.d.LIFO will have the lowest cost of goods

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