WRD_ch07_SV - 7-17InventoriesStudent VersionDescribe the...

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Unformatted text preview: 7-17InventoriesStudent VersionDescribe the importance of control over inventory.17-27-3Two primary objectives of control over inventory are:1.Safeguarding the inventory, and1.Properly reporting it in the financial statements.17-4A physical inventoryor count of inventory should be taken near year-end to make sure that the quantity of inventory reported in the financial statements is accurate.17-5Describe the three inventory cost flow assumptions and how they impact the income statement and balance sheet.27-57-6Under the first-in, first out (FIFO)inventory cost flow method, the first units purchased are assumed to be sold and the ending inventory is made up of the most recent purchases.27-7Under the last-in, first out (LIFO)inventory cost flow method, the last units purchased are assumed to be sold first and the ending inventory is made up of the first units purchased.27-8Under the average inventory cost flow method, the cost of the units sold and in ending inventory is an average of the purchase costs.27-9Determine the cost of inventory under the perpetual inventory system, using the FIFO, LIFO, and average cost methods.37-97-10On January 1, the firm had 100 units of Item 127B that cost $20 per unit.First-In, First-Out Method3Item 127B UnitsCostJan.1Inventory100$207-11On January 4, the firm sold 70 units of 127B at $30 each.Item 127B UnitsCostJan.1Inventory100$204Sale70First-In, First-Out Method37-123Exhibit 3Entries and Perpetual Inventory Account (FIFO)7-13On January 10, the firm purchased 80 units at $21 each....
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WRD_ch07_SV - 7-17InventoriesStudent VersionDescribe the...

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