Inventory Management Paper 19

Retrospective treatment of prior years’ financial statements is required when there is a change from:

Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the next year. As a result, Prunedale’s cost of goods sold for this year was:

Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,000, and its ending inventory on December 31 was understated by $17,000. In addition, a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase. None of these errors were discovered until the next year. As a result, Prunedale’s cost of goods sold for this year was:

On July 10, 2011, Johnson Corporation signed a purchase commitment to purchase inventory for $200,000 on or before February 15, 2012. The company’s fiscal year-end is December 31. The contract was exercised on February 1, 2012 and the inventory was purchased for cash at the contract price. On the purchase date of February 1, the market price of the inventory was $210,000. The market price of the inventory on December 31, 2011, was $180,000. The company uses a perpetual inventory system. How much loss on purchase commitment will Johnson recognize in 2011?

On July 10, 2011, Johnson Corporation signed a purchase commitment to purchase inventory for $200,000 on or before February 15, 2012. The company’s fiscal year-end is December 31. The contract was exercised on February 1, 2012 and the inventory was purchased for cash at the contract price. On the purchase date of February 1, the market price of the inventory was $210,000. The market price of the inventory on December 31, 2011, was $180,000. The company uses a perpetual inventory system. At what amount will Johnson record the inventory purchased on February 1, 2012?

Sullivan Corporation. has determined its year-end inventory on a FIFO basis to be $500,000. Information pertaining to that inventory is as follows:
selling price: $520,000
disposal cost: 30,000
normal profit margin: 60,000
replacement cost: 440,000
What should be the carrying value of Sullivan’s inventory?

Sullivan Corporation. has determined its year-end inventory on a FIFO basis to be $500,000. Information pertaining to that inventory is as follows:
selling price: $520,000
disposal cost: 30,000
normal profit margin: 60,000
replacement cost: 440,000
What should be the carrying value of Sullivan’s inventory if the company prepares its financial statements according to International Financial Reporting Standards?

When applying the lower-of-cost-or-market rule to inventory valuation according to International Financial Reporting Standards, market always is:

The Control Objective associated with reconciling the open production cost reports to the WIP inventory control account is:

The financial goal of a JIT inventory system is (if sales remain unchanged):