西南财经大学天府学院中级财务会计.docVIP

Chapter 08 - Inventories: Measurement Chapter 8 Inventories: Measurement QUESTIONS FOR REVIEW OF KEY TOPICS Question 8-1 Inventory for a manufacturing company consists of (1) raw materials, (2) work in process, and (3) finished goods. Raw materials represent the cost, primarily purchase price plus freight charges, of goods purchased from other manufacturers that will become part of the finished product. Work-in-process inventory represents the products that are not yet complete. The cost of work in process includes the cost of raw materials used in production, the cost of labor that can be directly traced to the goods in process, and an allocated portion of other manufacturing costs, called manufacturing overhead. When the manufacturing process is completed, these costs that have been accumulated in work in process are transferred to finished goods. Question 8-2 Beginning inventory plus net purchases for the period equals cost of goods available for sale. The main difference between a perpetual and a periodic system is that the periodic system allocates cost of goods available for sale to ending inventory and cost of goods sold only at the end of the period. The perpetual system accomplishes this allocation by decreasing inventory and increasing cost of goods sold each time goods are sold. Question 8-3 (1) purchase of merchandise (2) sale of merchandise (3) return of merchandise (4) payment of freight Perpetual System debit inventory debit cost of goods sold; credit inventory credit inventory debit inventory Periodic System debit purchases no entry credit purchase returns debit freight-in Question 8-4 Inventory shipped f.o.b. shipping point is included in the inventory of the purchaser when the merchandise reaches the common carrier. Laetner Corporation records the purchase in 2011 and includes the shipment in its ending inventory. Bockner Company records the sale in 2011. Inventory shipped f.o.b. destination is included in the inventory of