INTERMEDIATE ACCOUNTING (LL) W/CONNECT
9th Edition
ISBN: 9781260679694
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 8, Problem 8.1Q
Describe the three types of inventory of a manufacturing company.
Expert Solution & Answer
To determine
Inventory: It refers to the current assets that a company expects to sell during the normal course of business operations, the goods that are under process to be completed for future sale, or currently used for producing goods to be sold in the market.
To describe: the three types of inventory of a manufacturing company.
Explanation of Solution
The three types of inventory of a manufacturing company are:
- Raw Materials: It refers to the cost of the materials that are purchased from the suppliers to be converted into the goods ready for sale in the market.
- Work-in-process inventory: It refers to the goods that are yet to be completed to make it ready for sale. The cost of such inventory includes the cost of the raw materials, the cost of the labor, and other costs associated with the production to make the goods completed.
- Finished goods: It refers to the goods that are completed but are yet to be sold in the market. The cost of such goods includes the cost of raw materials and the cost of work-in-process inventory used in the production.
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Students have asked these similar questions
List the three inventory accounts used by manufacturing companies, and describe each.
Manufacturing firms use which of the following three inventory accounts?
A.
Materials, Work-in-process, Transferred-out.
B.
Materials, Work-in-process, Finished goods.
C.
Materials, Finished goods, Transferred-out.
D.
Work-in-process, Finished goods, Transferred-out.
Describe how the inventory accounts of a manufacturing company differ from the inventoryaccount of a merchandising company.
Chapter 8 Solutions
INTERMEDIATE ACCOUNTING (LL) W/CONNECT
Ch. 8 - Describe the three types of inventory of a...Ch. 8 - What is the main difference between a perpetual...Ch. 8 - The Cloud Company employs a perpetual inventory...Ch. 8 - The Bockner Company shipped merchandise to Laetner...Ch. 8 - What is a consignment arrangement? Explain the...Ch. 8 - Prob. 8.6QCh. 8 - The Esquire Company employs a periodic inventory...Ch. 8 - Prob. 8.8QCh. 8 - Its common in the electronics industry for unit...Ch. 8 - Explain why proponents of LIFO argue that it...
Ch. 8 - Prob. 8.11QCh. 8 - Describe the ratios used by financial analysts to...Ch. 8 - Prob. 8.13QCh. 8 - Prob. 8.14QCh. 8 - The Austin Company uses the dollar-value LIFO...Ch. 8 - Identify any differences between U.S. GAAP and...Ch. 8 - Determining ending inventory; periodic system ...Ch. 8 - Prob. 8.2BECh. 8 - Prob. 8.3BECh. 8 - Purchas e discounts; gross method LO83 On...Ch. 8 - Prob. 8.5BECh. 8 - Prob. 8.6BECh. 8 - Inventor y cost flow methods; perpetual system ...Ch. 8 - LIFO method LO84 Esquire Inc. uses the LIFO...Ch. 8 - LIFO method LO84 AAA Hardware uses the LIFO...Ch. 8 - LIFO liquidation LO86 Refer to the situation...Ch. 8 - Prob. 8.11BECh. 8 - Ratio analysis LO87 Selected financial statement...Ch. 8 - Dollar-value LIFO LO88 At the beginning of 2018,...Ch. 8 - Perpetual inventory system; journal entries LO81...Ch. 8 - Prob. 8.2ECh. 8 - Determining cost of goods sold; periodic inventory...Ch. 8 - Perpetual and periodic inventory systems compared ...Ch. 8 - Prob. 8.6ECh. 8 - Goods in transit; consignment LO82 The December...Ch. 8 - Physical quantities and costs included in...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.11ECh. 8 - FASB codification research LO82, LO83 Access the...Ch. 8 - Inventory cost flow methods; periodic system ...Ch. 8 - Inventory cost flow methods; perpetual system ...Ch. 8 - Comparison of FIFO and LIFO; periodic system ...Ch. 8 - Average cost method; periodic and perpetual...Ch. 8 - FIFO, LIFO, and average cost methods LO81, LO84...Ch. 8 - Supplemental LIFO disclosures; LIFO reserve; AEP...Ch. 8 - LIFO liquidation LO81, LO84, LO86 The Reuschel...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Mercury Company has only...Ch. 8 - Dollar-value LIFO LO88 Carswell Electronics...Ch. 8 - Concepts; terminology LO81 through LO85 Listed...Ch. 8 - Various inventory transactions; journal entries ...Ch. 8 - Prob. 8.2PCh. 8 - Prob. 8.4PCh. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Supple mental LIFO disclosures; Caterpillar LO84,...Ch. 8 - LIFO liquidation LO84, LO86 Taylor Corporation...Ch. 8 - LIFO liquidation LO84, LO86 Cansela Corporation...Ch. 8 - Prob. 8.11PCh. 8 - Integrating problem; inventories and accounts...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Kingston Company uses the...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018,...Ch. 8 - Prob. 8.1BYPCh. 8 - Real World Case 82 Physical quantities and costs...Ch. 8 - Judgment Case 83 The specific identification...Ch. 8 - Prob. 8.4BYPCh. 8 - Prob. 8.5BYPCh. 8 - Judgment Case 86 Goods in transit LO82 At the end...Ch. 8 - Ethics Case 87 Profit manipulation LO84 In 2017...Ch. 8 - Real World Case 88 Effects of inventory valuation...Ch. 8 - Real World Case 89 Effects of inventory valuation...Ch. 8 - Communication Case 810 Dollar-value LIFO method ...Ch. 8 - Prob. 8.11BYPCh. 8 - Prob. 8.CCTCCh. 8 - Prob. CCIFRS
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- What are the four steps involved in determining the cost of inventory transferred from one department to the next and the cost of work in process inventory?arrow_forwardThe categories of manufacturing costs comprising the total cost of work in process inventory are which of the following? Group of answer choices Selling expenses Direct costs General and administrative expenses Direct labor, direct materials, and manufacturing overheadarrow_forwardInventory accounts for a merchandiser include: Select one: a. Raw material inventory b. Work in process inventory c. Manufacturing overhead inventory d. Merchandise inventoryarrow_forward
- What is the difference between manufacturing and nonmanufacturing costs and between product and period costs? Also, please describe the three inventory accounts of a manufacturing firm.arrow_forwardFrom beginning to end, place these items in the order of the flow of goods. A. cost of goods sold B. raw materials inventory C. finished goods inventory D. work in process inventoryarrow_forwardInventory for a manufacturer consists of raw materials, work in process, and finished goods. Describe about it.arrow_forward
- A company’s Work in Process Inventory T-account follows.arrow_forwardIn what ways are the inventory accounts of a retailing companydifferent from those of a manufacturing company?arrow_forwardDistinguish between a Merchandisers Income Statement and a Manufacturing Companies Income Statement.arrow_forward
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