Which assumed inventory cost flow method:

(a) usually parallels the actual physical flow of merchandise?

“The selection of an inventory cost flow method is a decision made by accountants.” Do you agree? Explain. Once a method has been selected, what accounting requirement applies?

“The key to successful business operations is effective inventory management.” Do you agree? Explain.

Suppose this information is available for PepsiCo, Inc. for 2012, 2013, and 2014.

$$\begin{array}{lccc} \text{(in millions)}&\underline{\textbf{2012}}&\underline{\textbf{2013}}&\underline{\textbf{2014}}\\[5pt] \text{Beginning inventory}&\text{\$\hspace{5pt}1,926}&\text{\$\hspace{5pt}2,290}&\text{\$\hspace{5pt}2,522}\\ \text{Ending inventory}&\text{\hspace{10pt}2,290}&\text{\hspace{10pt}2,522}&\text{\hspace{10pt}2,618}\\ \text{Cost of goods sold}&\text{\hspace{5pt}18,038}&\text{\hspace{5pt}20,351}&\text{\hspace{5pt}20,099}\\ \text{Sales revenue}&\text{\hspace{5pt}39,474}&\text{\hspace{5pt}43,251}&\text{\hspace{5pt}43,232}\\ \end{array}$$

Instructions

Calculate the inventory turnover, days in inventory, and gross profit rate for PepsiCo., Inc. for 2012, 2013, and 2014. Comment on any trends.

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for inventories.

Columbia Bank and Trust is considering giving Gallup Company a loan. Before doing so, it decides that further discussions with Gallup’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $275,000. Discussions with the accountant reveal the following.

1. Gallup sold goods costing$55,000 to Bazil Company FOB shipping point on December 28. The goods are not expected to reach Bazil until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Gallup FOB destination on December 27 and were still in transit at year-end.
3. Gallup received goods costing$25,000 on January 2. The goods were shipped FOB shipping point on December 26 by Lynch Co. The goods were not included in the physical count.
4. Gallup sold goods costing $51,000 to Lamey of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Gallup’s physical inventory.
5. Gallup received goods costing$42,000 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $275,000.

Instructions

Determine the correct inventory amount on December 31.

The diameter of bushings turned out by a manufacturing process is a normally distributed random variable with a mean of $4.035 \mathrm{~mm}$ and a standard deviation of $0.005 \mathrm{~mm}$. The inspection procedure requires a sample of 25 bushings once an hour. (a) Within what interval should 95 percent of the bushing diameters fall? (b) Within what interval should 95 percent of the sample means fall? (c) What conclusion would you reach if you saw a sample mean of 4.020? A sample mean of $4.055$ ?

What is $P(A\cup B)=P(A)+P(B)-P(A\cap B)$?

Identify, in the sequence in which they are prepared, the three trial balances that are required in the accounting cycle.

Describe physical characteristics of soil that could help distinguish three different soil samples.

Identify three physical properties of ionic compounds that are associated with ionic bonds, and relate them to bond strength.

Which line segments on the cooling curve in Problem 4.23 correspond to each of the following physical states?

For each of the ARM virtual address formats shown in earlier figure, show the physical address format.

The BCC packing structure of a diamond is suggested by its physical model. Why isn't this feasible?