Inventory has been a very big topic for the news since the COVID-19 pandemic began. We all know about the infamous toilet paper scramble whereby there was no toilet paper in stores. As the world begins to open and new business processes and procedures are developed the world is seeing residual impact of inventory supply for items that are not just toilet paper. See this article here (https://www.businesswire.com/news/home/20211123006072/en/Gap-Inc.-Reports-Third-Quarter-Results) about Gap, Inc’s financial performance in 2021. There is a lot of talk about inventory and how it affects their financials. Read through this and see if you can understand the affects of inventory, can you explain it, talk to your classmates about it? Let’s try to link this all back to our reading…ask the questions about Gap, Inc like are they valuing inventory on a FIFO basis…what does that mean for them? LIFO Basis? Average cost? Let’s pull this apart so we can further understand the impact of this global pandemic and relate it back to Accounting.
Question 1 (1 point)
The cost flow method that results in the lowest income taxes when prices are rising is
Question 2 (1 point)
The data below are for Parrett Enterprises:
Beginning inventory 150 units at $2.00
Purchase—August 375 units at $1.50
Purchase—October 150 units at $3.00
A periodic inventory system is used; ending inventory is 330 units.
What is the ending inventory under FIFO?
Question 3 (1 point)
Double-counting an inventory item at year end will result in
Question 4 (1 point)
A retail company has goods available for sale of $300,000 at retail and $210,000 at cost, and ending inventory of $80,000 at retail. What is the estimated cost of goods sold?
Question 5 (1 point)
Which method might be used to estimate inventory costs when physical inventories are not taken?