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Unformatted text preview: CHAPTER 6 Reporting and Analyzing Inventory ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Describe the steps in de- termining inventory quant- ities. 1, 2, 3, 4, 5, 6 1, 4, 5, 1, 2 1A 1B 2. Explain the basis of ac- counting for inventories and apply the inventory cost flow methods under a periodic inventory system. 7, 8, 9, 10, 16 2, 3 3, 4, 5, 6 2A, 3A, 4A, 5A, 6A 2B, 3B, 4B, 5B, 6B 3. Explain the financial state- ment and tax effects of each of the inventory cost flow assumptions. 11, 12, 17 4, 5 3, 5 2A, 3A, 4A, 5A, 6A, 8A, 9A 2B, 3B, 4B, 5B, 6B, 8B, 9B 4. Explain the lower of cost or market basis of ac- counting for inventories. 13, 14, 15 6 5. Compute and interpret the inventory turnover ratio. 18 7 7, 8 7A 7B 6. Describe the LIFO re- serve and explain its im- portance for comparing results of different com- panies. 19 8 8 7A 7B *7. Apply the inventory cost flow methods to perpetual inventory records. 20, 21 9 9, 10 8A, 9A 8B, 9B *8. Indicate the effects of in- ventory errors on the fin- ancial statements. 22 10 11, 12 *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the Ap- pendix to each chapter. 6-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Determine items and amounts to be recorded in inventory. Moderate 15-20 2A Determine cost of goods sold and ending inventory using FIFO, LIFO, and average cost with analysis. Simple 30-40 3A Determine cost of goods sold and ending inventory using FIFO, LIFO, and average cost in a periodic inventory sys- tem and assess financial statement effects. Simple 30-40 4A Compute ending inventory, prepare income statements, and answer questions using FIFO and LIFO. Moderate 30-40 5A Calculate ending inventory, cost of goods sold, and gross profit under periodic approach; compare results. Moderate 30-40 6A Compare specific identification, FIFO, and LIFO under periodic method; use of cost flow assumption to justify price increase. Moderate 20-30 7A Compute inventory turnover ratio, days in inventory, and current ratio based on LIFO and after adjusting for LIFO reserve. Moderate 20-30 *8A Calculate cost of goods sold and ending inventory using LIFO, FIFO, and average cost under the perpetual system; compare gross profit under each assumption. Moderate 30-40 *9A Determine ending inventory under a perpetual inventory system. Moderate 30-40 1B Determine items and amounts to be recorded in inventory. Moderate 15-20 2B Determine cost of goods sold and ending inventory using FIFO, LIFO, and average cost with analysis. Simple 30-40 3B Determine cost of goods sold and ending inventory using FIFO, LIFO, and average cost in a periodic inventory sys- tem, and assess financial statement effect....
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- Spring '09
- Financial Accounting, ........., Goods Sold