75. Oslo
Corporation has two products in its ending inventory, each accounted for at the
lower of cost or market. Specific data with respect to each product follows:
Product
#1 Product #2
Selling price $60 $130
Historical cost 40 70
Cost to sell 10 26
Cost to complete 15 40
In pricing its ending inventory using the
lower-of-cost-or-net realizable value, what unit values should Oslo use for
products #1 and #2, respectively?
a. $35 and $64.
b. $50 and $104.
c. $40 and $70.
d. $45 and $90.
76. Muckenthaler Company sells product 2005WSC
for $25 per unit. The cost of one unit of 2005WSC is $18. The estimated cost to
complete a unit is $4, and the estimated cost to sell is $6. At what amount per
unit should product 2005WSC be reported, applying lower-of-cost-or-net
realizable value?
a. $20.
b. $15.
c. $18.
d. $19.
77. Lexington Company sells product 1976NLC for
$45 per unit. The cost of one unit of 1976NLC is $36. The estimated cost to complete
a unit is $8, and the estimated cost to sell is $5. At what amount per unit
should product 1976NLC be reported, applying lower-of-cost-or-net realizable
value?
a. $36.
b. $32.
c. $37.
d. $40.
78. Given the acquisition cost of product Z is
$32, the cost to complete product Z is $9.00, the cost to sell product Z is $5,
and the selling price for product Z is $50.00, what is the proper per unit
inventory price for product Z?
a. $32.
b. $45.
c. $36.
d. $41.
79. Given the acquisition cost of product ALPHA
is $85, the cost to complete product ALPHA is $8, the cost to sell product
ALPHA is $6, and the selling price for product ALPHA is $97, what is the proper
per unit inventory price for product ALPHA?
a. $85.
b. $83
c. $79.
d. $89.
80. Given the acquisition cost of product
Dominoe is $86, the cost to complete for product Dominoe is $10, the cost to
sell product Dominoe is $8, and the selling price for product Dominoe is $101,
what is the proper per unit inventory price for product Dominoe?
a. $91.
b. $93.
c. $83.
d. $86.
81. Given the historical cost of product Z is
$150, the selling price of product Z is $190, costs to sell product Z are $21,
and the cost to complete product Z is $30, what is the net realizable value
that should be used in the lower-of-cost-or-net realizable value comparison?
a. $160.
b. $169.
c. $139.
d. $150.
82. Given the historical cost of product Z is
$150, the selling price of product Z is $190, costs to sell product Z are $11,
and the cost to complete product Z is $20, what is the amount that should be
used to value the inventory under the lower-of-cost-or-net realizable value
method?
a. $130.
b. $150.
c. $159.
d. $139.
83. Given the historical cost of product
Dominoe is $65, the selling price of product Dominoe is $90, costs to sell
product Dominoe are $16, and the cost to complete the product is $14, what is
the amount that should be used to value the inventory under the
lower-of-cost-or-net realizable value method?
a. $65.
b. $76.
c. $60.
d. $74.
84. Robust Inc. has the following information
related to an item in its ending inventory. Product 66 has a cost of $6,500, a selling
price of $7,100, a cost to complete of $600, and a cost to sell of $400. What
is the lower-of-cost-or-net realizable value for product 66?
a. $5,900.
b. $6,100.
c. $6,500.
d. $6,700.
85. Robust Inc. has the following information
related to an item in its ending inventory. Packit (Product # 874) has a cost
of $498, a selling price of $536, a cost to complete of $62, and a cost to sell
of $28. What is the lower-of-cost-or-net realizable inventory value for Packit?
a. $446.
b. $498.
c. $536.
d. $474.
86. Robust Inc. has the following information
related to an item in its ending inventory. Acer Top has a cost of $502, a selling
price of $568, a cost to complete of $53, and a cost to sell of $38. What is
the lower-of-cost-or-net realizable inventory value for Acer Top?
a. $515.
b. $502.
c. $477.
d. $530.
87. Rios, Inc. uses International Financial
Reporting Standards (IFRS). In 2010, Rios, Inc. experienced a decline in the
value of its inventory resulting in a write-down of its inventory from $240,000
to $200,000. The company used the loss method in 2010 to record the necessary
adjustment and uses an allowance account to reduce inventory to NRV. In 2011,
market conditions have improved dramatically and Rios, Inc.’s inventory
increases to an NRV of $216,000. Which of the following will Rios, Inc. record
in 2011?
a. A debit to Recovery
of Inventory Loss for $16,000.
b. A credit to
Recovery of Inventory Loss for $24,000.
c. A debit to Allowance
to Reduce Inventory to NRV of $16,000.
d. A credit to
Allowance to Reduce Inventory to NRV of $24,000.
88. Dub Dairy produces milk to sell to local
and national ice cream producers. Dub Dairy began operations on January 1, 2011
by purchasing 840 milk cows for $1,176,000. The company controller had the
following information available at year end relating to the cows:
Milking
cows
Carrying
value, January1, 2011 $1,176,000
Change
in fair value due to growth and price changes 365,000
Decrease
in fair value due to harvest (42,000)
Milk
harvested during 2011 $54,000
At
December 31, 2011, what is the value of the milking cows on Dub Dairy’s
statement of financial position?
a. $1,176,000
b. $1,541,000
c. $1,134,000
d. $1,499,000
89. Dub Dairy produces milk to sell to local
and national ice cream producers. Dub Dairy began operations on January 1, 2011
by purchasing 840 milk cows for $1,176,000. The company controller had the
following information available at year end relating to the cows:
Milking
cows
Carrying
value, January1, 2011 $1,176,000
Change
in fair value due to growth and price changes 365,000
Decrease
in fair value due to harvest (42,000)
Milk
harvested during 2011 but not yet sold $54,000
On
Dub Dairy’s income statement for the year ending December 31, 2011, what amount
of unrealized gain on biological assets will be reported?
a. $ -0-
b. $365,000
c. $323,000
d. $54,600
90. Dub Dairy produces milk to sell to local
and national ice cream producers. Dub Dairy began operations on January 1, 2011
by purchasing 840 milk cows for $1,176,000. The company controller had the
following information available at year end relating to the cows:
Milking
cows
Carrying
value, January1, 2011 $1,176,000
Change
in fair value due to growth and price changes 365,000
Decrease
in fair value due to harvest (42,000)
Milk
harvested during 2011 but not yet sold $54,000
On
Dub Dairy’s income statement for the year ending December 31, 2011, what amount
of unrealized gain on harvested milk will be reported?
a. No gain is reported
until the milk is sold.
b. $12,000
c. $54,000
d. $311,000
91. Braum Dairy produces milk to sell to local
and national ice cream producers. Braum Dairy began operations on January 1,
2011 by purchasing 650 milk cows for $780,000. The company controller had the
following information available at year end relating to the cows:
Milking
cows
Carrying value, January1, 2011 $780,000
Change
in fair value due to growth and price changes 242,000
Decrease
in fair value due to harvest (28,000)
Milk
harvested during 2011 but not yet sold $36,200
On
Braum Dairy’s income statement for the year ending December 31, 2011, what
amount of unrealized gain on biological assets will be reported?
a. $ -0-
b. $242,000
c. $214,000
d. $36,200
92. Braum Dairy produces milk to sell to local
and national ice cream producers. Braum Dairy began operations on January 1,
2011 by purchasing 650 milk cows for $780,000. The company controller had the
following information available at year end relating to the cows:
Milking
cows
Carrying
value, January1, 2011 $780,000
Change
in fair value due to growth and price changes 242,000
Decrease
in fair value due to harvest (28,000)
Milk
harvested during 2011 but not yet sold $36,200
On
Braum Dairy’s income statement for the year ending December 31, 2011, what
amount of unrealized gain on harvest milk will be reported?
a. No gain is reported
until the milk is sold.
b. $8,200
c. $36,200
d. $205,800.
93. Lucy’s Llamas purchased 1,000 llamas on
January 1, 2011. These llamas will be sheared semiannually and their wool sold
to specialty clothing manufacturers. The llamas were purchased for $148,000.
During 2011 the change in fair value due to growth and price changes is $9,400,
the wool harvested but not yet sold is valued at net realizable value of
$18,000, and the change in fair value due to harvest is ($1,150). What is the
value of the llamas on Lucy’s Llamas statement of financial position on June
30, 2011?
a. $156,250
b. $148,000
c. $146,850
d. $128,850
94. Lucy’s Llamas purchased 1,000 llamas on
January 1, 2011. These llamas will be sheared semiannually and their wool sold
to specialty clothing manufacturers. The llamas were purchased for $148,000.
During 2011 the change in fair value due to growth and price changes is $9,400,
the wool harvested but not yet sold is valued at net realizable value of
$18,000, and the change in fair value due to harvest is ($1,150). On Lucy’s
Llamas income statement for the year ending December 31, 2011, what amount of
unrealized gain on biological assets will be reported?
a. $26,250
b. $27,400
c. $9,400
d. $8,250
95. Lenny’s Llamas purchased 1,500 llamas on
January 1, 2011. These llamas will be sheared semiannually and their wool sold
to specialty clothing manufacturers. The llamas were purchased for $222,000.
During 2011 the change in fair value due to growth and price changes is
$14,100, the wool harvested but not yet sold is valued at net realizable value
of $27,000, and the change in fair value due to harvest is ($1,750). What is
the value of the llamas on Lenny’s Llamas statement of financial position on
June 30, 2011?
a. $234,350
b. $222,000
c. $220,250
d. $193,250
96. Lenny’s Llamas purchased 1,000 llamas on
January 1, 2011. These llamas will be sheared semiannually and their wool sold
to specialty clothing manufacturers. The llamas were purchased for $222,000.
During 2011 the change in fair value due to growth and price changes is $14,100,
the wool harvested but not yet sold is valued at net realizable value of $27,000,
and the change in fair value due to harvest is ($1,750). On Lenny’s Llamas
income statement for the year ending December 31, 2011, what amount of
unrealized gain on biological assets will be reported?
a. $39,350
b. $41,100
c. $14,100
d. $12,350
97. Turner Corporation acquired two inventory
items at a lump-sum cost of $50,000. The acquisition included 3,000 units of
product LF, and 7,000 units of product 1B. LF normally sells for $15 per unit,
and 1B for $5 per unit. If Turner sells 1,000 units of LF, what amount of gross
profit should it recognize?
a. $1,875
b. $5,625.
c. $10,000.
d. $11,875.
98. Robertson Corporation acquired two
inventory items at a lump-sum cost of $40,000. The acquisition included 3,000
units of product CF, and 7,000 units of product 3B. CF normally sells for $12
per unit, and 3B for $4 per unit. If Robertson sells 1,000 units of CF, what
amount of gross profit should it recognize?
a. $1,500.
b. $4,500.
c. $8,000.
d. $9,500.
99. At
a lump-sum cost of $48,000, Pratt Company recently purchased the following
items for resale:
Item No. of Items
Purchased Resale Price
Per Unit
M 4,000 $2.50
N 2,000 8.00
O 6,000 4.00
The appropriate cost per unit of
inventory is:
M N O
a. $2.50 $8.00 $4.00
b. $2.07 $13.24 $2.21
c. $2.40 $7.68 $3.84
d. $4.00 $4.00 $4.00
100. Confectioners,
a chain of candy stores, purchases its candy in bulk from its suppliers. For a
recent shipment, the company paid $3,000 and received 8,500 pieces of candy
that are allocated among three groups. Group 1 consists of 2,500 pieces that
are expected to sell for $0.25 each. Group 2 consists of 5,500 pieces that are expected
to sell for 0.60 each. Group 3 consists of 500 pieces that are expected to sell
for $1.20 each. Using the relative sales value method, what is the cost per
item in group 1?
a. $0.250.
b. $0.166.
c. $0.200.
d. $.0375.
101. Confectioners, a chain of candy stores,
purchases its candy in bulk from its suppliers. For a recent shipment, the
company paid $3,000 and received 8,500 pieces of candy that are allocated among
three groups. Group 1 consists of 2,500 pieces that are expected to sell for
$0.25 each. Group 2 consists of 5,500 pieces that are expected to sell for 0.60
each. Group 3 consists of 500 pieces that are expected to sell for $1.20 each.
Using the relative sales value method, what is the cost per item in group 2?
a. $0.375.
b. $0.600.
c. $0.350.
d. $.0398.
102. Confectioners,
a chain of candy stores, purchases its candy in bulk from its suppliers. For a
recent shipment, the company paid $3,000 and received 8,500 pieces of candy
that are allocated among three groups. Group 1 consists of 2,500 pieces that
are expected to sell for $0.25 each. Group 2 consists of 5,500 pieces that are expected
to sell for 0.60 each. Group 3 consists of 500 pieces that are expected to sell
for $1.20 each. Using the relative sales value method, what is the cost per
item in group 3?
a. $0.796.
b. $0.375.
c. $1.200.
d. $0.900.
103. During
the current fiscal year, Jeremiah Corp. signed a long-term noncancellable
purchase commitment with its primary supplier. Jeremiah agreed to purchase $2.5
million of raw materials during the next fiscal year under this contract. At
the end of the current fiscal year, the raw material to be purchased under this
contract had a market value of $2.3 million. What is the journal entry at the
end of the current fiscal year?
a. Debit Unrealized Holding Loss for
$200,000 and credit Purchase Commitment Liability for $200,000.
b. Debit Purchase Commitment Liability
for $200,000 and credit Unrealized Holding Gain for $200,000.
c. Debit Unrealized Holding Loss
for $2,300,000 and credit Purchase Commitment Liability for $2,300,000.
d. No journal entry is required.
104. During
the prior fiscal year, Jeremiah Corp. signed a long-term noncancellable
purchase commitment with its primary supplier to purchase $2.5 million of raw
materials. Jeremiah paid the $2.5 million to acquire the raw materials when the
raw materials were only worth $2.2 million. Assume that the purchase commitment
was properly recorded. What is the journal entry to record the purchase?
a. Debit Inventory for $2,200,000,
and credit Cash for $2,200,000.
b. Debit Inventory for $2,200,000,
debit Unrealized Holding Loss for $300,000, and credit Cash for $2,500,000.
c. Debit Inventory for $2,200,000,
debit Purchase Commitment Liability for $300,000 and credit Cash for
$2,500,000.
d. Debit Inventory for $2,500,000,
and credit Cash for $2,500,000.
105. During 2010, Larue Co., a manufacturer of
chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at
$4.00 per pound, delivery to be made in the spring of 2011. Because a record
harvest is predicted for 2011, the price per pound for cocoa beans had fallen
to $3.10 by December 31, 2010.
Of
the following journal entries, the one which would properly reflect in 2010 the
effect of the commitment of Larue Co. to purchase the 100,000 pounds of cocoa
is
a. Cocoa
Inventory.............................................................. 400,000
Accounts
Payable................................................ 400,000
b. Cocoa
Inventory.............................................................. 310,000
Loss
on Purchase Commitments.................................... 90,000
Accounts
Payable................................................ 400,000
c. Unrealized Holding Loss.................................................. 90,000
Purchase
Commitments Liability......................... 90,000
d. No entry would be necessary in 2010
106. RS Corporation, a manufacturer of ethnic
foods, contracted in 2010 to purchase 500 pounds of a spice mixture at $5.00
per pound, delivery to be made in spring of 2011. By 12/31/10, the price per
pound of the spice mixture had risen to $5.60 per pound. In 2010, AJ should
recognize
a. a loss of $2,500.
b. a loss of $300.
c. no gain or loss.
d. a gain of $300.
107. LF Corporation, a manufacturer of Mexican foods,
contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per
pound, delivery to be made in spring of 2011. By 12/31/10, the price per pound
of the spice mixture had dropped to $4.60 per pound. In 2010, LF should
recognize
a a loss of $5,000.
b. a loss of $400.
c. no gain or loss.
d. a gain of $400.
108. The following information is available for
October for Barton Company.
Beginning
inventory $ 50,000
Net
purchases 150,000
Net
sales 300,000
Percentage
markup on cost 66.67%
A fire destroyed
Barton’s October 31 inventory, leaving undamaged inventory with a cost of
$3,000. Using the gross profit method, the estimated ending inventory destroyed
by fire is
a. $17,000.
b. $77,000.
c. $80,000.
d. $100,000.
109. The
following information is available for October for Norton Company.
Beginning
inventory $100,000
Net
purchases 300,000
Net
sales 600,000
Percentage
markup on cost 66.67%
A fire destroyed
Norton’s October 31 inventory, leaving undamaged inventory with a cost of
$6,000. Using the gross profit method, the estimated ending inventory destroyed
by fire is
a. $34,000.
b. $154,000.
c. $160,000.
d. $200,000.
Use
the following information for questions 110 and 111.
Miles
Company, a wholesaler, budgeted the following sales for the indicated months:
June July August
Sales on account $1,800,000 $1,840,000 $1,900,000
Cash sales 180,000 200,000 260,000
Total sales $1,980,000 $2,040,000 $2,160,000
All merchandise
is marked up to sell at its invoice cost plus 20%. Merchandise inventories at
the beginning of each month are at 30% of that month's projected cost of goods
sold.
110. The
cost of goods sold for the month of June is anticipated to be
a. $1,440,000.
b. $1,500,000.
c. $1,520,000.
d. $1,650,000.
111. Merchandise
purchases for July are anticipated to be
a. $1,632,000.
b. $2,076,000.
c. $1,700,000.
d. $1,730,000.
112. Reyes
Company had a gross profit of $360,000, total purchases of $420,000, and an
ending inventory of $240,000 in its first
year of operations as a retailer. Reyes’s sales in its first year must have
been
a. $540,000.
b. $660,000.
c. $180,000.
d. $600,000.
113. A
markup of 40% on cost is equivalent to what markup on selling price?
a. 29%
b. 40%
c. 60%
d. 71%
114. Kesler,
Inc. estimates the cost of its physical inventory at March 31 for use in an
interim financial statement. The rate of markup on cost is 25%. The following
account balances are available:
Inventory, March 1 $220,000
Purchases 172,000
Purchase returns 8,000
Sales during March 300,000
The estimate of the cost of inventory at March 31
would be
a. $84,000.
b. $144,000.
c. $159,000.
d. $112,000.
115. On
January 1, 2010, the merchandise inventory of Glaus, Inc. was $800,000. During
2010 Glaus purchased $1,600,000 of merchandise and recorded sales of
$2,000,000. The gross profit rate on these sales was 25%. What is the
merchandise inventory of Glaus at December 31, 2010?
a. $400,000.
b. $500,000.
c. $900,000.
d. $1,500,000.
116. For
2010, cost of goods available for sale for Tate Corporation was $900,000. The
gross profit rate was 20%. Sales for the year were $800,000. What was the
amount of the ending inventory?
a. $0.
b. $260,000.
c. $180,000.
d. $160,000.
117. On
April 15 of the current year, a fire destroyed the entire uninsured inventory
of a retail store. The following data are available:
Sales, January 1 through April 15 $300,000
Inventory, January 1 50,000
Purchases, January 1 through April 15 250,000
Markup on cost 25%
The amount of the inventory loss is
estimated to be
a. $60,000.
b. $30,000.
c. $75,000.
d. $50,000.
118. The
sales price for a product provides a gross profit of 25% of sales price. What
is the gross profit as a percentage of cost?
a. 25%.
b. 20%.
c. 33%.
d. Not enough information is provided to determine.
119. Gamma Ray Corp. has annual sales totaling
$650,000 and an average gross profit of 20% of cost. What is the dollar amount
of the gross profit?
a. $130,000.
b. $97,500.
c. $108,333.
d. $162,500.
120. On
August 31, a hurricane destroyed a retail location of Vinny's Clothier
including the entire inventory on hand at the location. The inventory on hand
as of June 30 totaled $320,000. From June 30 until the time of the hurricane,
the company made purchases of $85,000 and had sales of $250,000. Assuming the
rate of gross profit to selling price is 40%, what is the approximate value of
the inventory that was destroyed?
a. $320,000.
b. $181,500.
c. $205,000.
d. $255,000.
121. On
October 31, a fire destroyed PH Inc.'s entire retail inventory. The inventory
on hand as of January 1 totaled $680,000. From January 1 through the time of
the fire, the company made purchases of $165,000 and had sales of $360,000.
Assuming the rate of gross profit to selling price is 40%, what is the
approximate value of the inventory that was destroyed?
a. $680,000.
b. $673,000.
c. $485,000.
d. $629,000.
122. On March 15, a fire destroyed Interlock
Company's entire retail inventory. The inventory on hand as of January 1
totaled $1,650,000. From January 1 through the time of the fire, the company
made purchases of $683,000, incurred freight-in of $78,000, and had sales of
$1,210,000. Assuming the rate of gross profit to selling price is 30%, what is
the approximate value of the inventory that was destroyed?
a. $2,048,000.
b. $1,486,000.
c. $1,564,000.
d. $2,411,000.
123. Dicer
uses the conventional retail method to determine its ending inventory at cost.
Assume the beginning inventory at cost (retail) were $130,000 ($198,000),
purchases during the current year at cost (retail) were $685,000 ($1,100,000),
freight-in on these purchases totaled $43,000, sales during the current year totaled
$1,050,000, and net markups (markdowns) were $24,000 ($36,000). What is the
ending inventory value at cost?
a. $153,164.
b. $156,165.
c. $157,412.
d. $236,000.
124. Boxer Inc. uses the conventional retail
method to determine its ending inventory at cost. Assume the beginning
inventory at cost (retail) were $65,500 ($99,000), purchases during the current
year at cost (retail) were $568,000 ($865,600), freight-in on these purchases
totaled $26,500, sales during the current year totaled $811,000, and net
markups were $69,000. What is the ending inventory value at cost?
a. $222,600.
b. $174,366.
c. $142,241.
d. $152,308.
125. Barker
Pet supply uses the conventional retail method to determine its ending
inventory at cost. Assume the beginning inventory at cost (retail) were
$265,600 ($326,900), purchases during the current year at cost (retail) were
$1,068,600 ($1,386,100), freight-in on these purchases totaled $63,900, sales
during the current year totaled $1,302,000, and net markups (markdowns) were
$2,000 ($96,300). What is the ending inventory value at cost?
a. $316,700.
b. $258,111.
c. $411,000.
d. $246,667.
126. Crane
Sales Company uses the retail inventory method to value its merchandise
inventory. The following information is available for the current year:
Cost Retail
Beginning inventory $
30,000 $ 50,000
Purchases 145,000 200,000
Freight-in 2,500 —
Net markups — 8,500
Net markdowns — 10,000
Employee discounts — 1,000
Sales — 205,000
If the ending inventory is to be valued at the
lower-of-cost-or-net realizable value, what is the cost to retail ratio?
a. $177,500 ÷ $250,000
b. $177,500 ÷ $258,500
c. $175,000 ÷ $260,000
d. $177,500 ÷ $248,500
Use
the following information for questions 127 through 129.
The
following data concerning the retail inventory method are taken from the
financial records of Welch Company.
Cost Retail
Beginning inventory $ 49,000 $ 70,000
Purchases 224,000 320,000
Freight-in 6,000 —
Net markups — 20,000
Net markdowns — 14,000
Sales — 336,000
127. The ending inventory at retail should be
a. $74,000.
b. $60,000.
c. $64,000.
d. $42,000.
128. If the ending inventory is to be valued at approximately
the lower of cost or market, the calculation of the cost to retail ratio should
be based on goods available for sale at (1) cost and (2) retail, respectively
of
a. $279,000 and
$410,000.
b. $279,000 and
$396,000.
c. $279,000 and
$390,000.
d. $273,000 and
$390,000.
129. If
the foregoing figures are verified and a count of the ending inventory reveals
that merchandise actually on hand amounts to $54,000 at retail, the business
has
a. realized a windfall
gain.
b. sustained a loss.
c. no gain or loss as
there is close coincidence of the inventories.
d. none of these.
130. Drake Corporation had the following
amounts, all at retail:
Beginning
inventory $ 3,600 Purchases $120,000
Purchase
returns 6,000 Net markups 18,000
Abnormal
shortage 4,000 Net markdowns 2,800
Sales 72,000 Sales returns 1,800
Employee
discounts 1,600 Normal
shortage 2,600
What is Drake’s
ending inventory at retail?
a. $54,400.
b. $56,000.
c. $57,600.
d. $58,400
131. Goren
Corporation had the following amounts, all at retail:
Beginning
inventory $ 3,600 Purchases $100,000
Purchase
returns 6,000 Net markups 18,000
Abnormal
shortage 4,000 Net markdowns 2,800
Sales 72,000 Sales returns 1,800
Employee
discounts 1,600 Normal
shortage 2,600
What is Goren’s ending inventory at retail?
a. $34,400.
b. $36,000.
c. $37,600.
d. $38,400
Use
the following information for questions 132 through 134.
Plank Co. uses the retail inventory method. The
following information is available for the current year.
Cost Retail
Beginning inventory $ 78,000 $122,000
Purchases 295,000 415,000
Freight-in 5,000 —
Employee discounts — 2,000
Net markups — 15,000
Net Markdowns — 20,000
Sales — 390,000
132. If the ending inventory is to be valued at
approximately lower-of-average-cost-or-net realizable value, the calculation of
the cost ratio should be based on cost and retail of
a. $300,000 and
$430,000.
b. $300,000 and
$428,000.
c. $373,000 and
$550,000.
d. $378,000 and
$552,000.
133. The
ending inventory at retail should be
a. $160,000.
b. $150,000.
c. $144,000.
d. $140,000.
134. The
approximate cost of the ending inventory by the conventional retail method is
a. $95,900.
b. $94,920.
c. $98,000.
d. $102,480.
135. Fry
Corporation’s computation of cost of goods sold is:
Beginning
inventory $ 60,000
Add:
Cost of goods purchased 405,000
Cost
of goods available for sale
465,000
Ending
inventory 90,000
Cost
of goods sold $375,000
The
average days to sell inventory for Fry are
a. 58.4 days.
b. 67.6 days.
c. 73.0 days.
d. 87.6 days.
136. East
Corporation’s computation of cost of goods sold is:
Beginning
inventory $ 60,000
Add:
Cost of goods purchased 405,000
Cost
of goods available for sale 465,000
Ending
inventory 80,000
Cost
of goods sold $385,000
The
average days to sell inventory for East are
a. 56.9 days.
b. 63.1 days.
c. 66.4 days.
d. 75.8 days.
137. The
2010 financial statements of Sito Company reported a beginning inventory of
$80,000, an ending inventory of $120,000, and cost of goods sold of $600,000
for the year. Sito’s inventory turnover ratio for 2010 is
a. 7.5 times.
b. 6.0 times.
c. 5.0 times.
d. 4.3 times.
138. Boxer Inc. reported inventory at the
beginning of the current year of $360,000 and at the end of the current year of
$411,000. If net sales for the current year are $2,214,600 and the
corresponding cost of sales totaled $1,879,400, what is the inventory turnover
ratio for the current year?
a. 5.74.
b. 4.57.
c. 5.39.
d. 4.88.
Multiple Choice Answers—Computational
Item
|
Ans.
|
Item
|
Ans.
|
Item
|
Ans.
|
Item
|
Ans.
|
Item
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Ans.
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Item
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Ans.
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Item
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Ans.
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75.
|
a
|
85.
|
a
|
95.
|
a
|
105.
|
c
|
115.
|
c
|
125.
|
b
|
135.
|
c
|
76.
|
b
|
86.
|
c
|
96.
|
d
|
106.
|
c
|
116.
|
b
|
126.
|
b
|
136.
|
c
|
77.
|
b
|
87.
|
c
|
97.
|
b
|
107.
|
b
|
117.
|
a
|
127.
|
b
|
137.
|
b
|
78.
|
A
|
88.
|
d
|
98.
|
b
|
108.
|
a
|
118.
|
c
|
128.
|
a
|
138.
|
d
|
79.
|
B
|
89.
|
c
|
99.
|
c
|
109.
|
a
|
119.
|
c
|
129.
|
b
|
||
80.
|
C
|
90.
|
c
|
100.
|
b
|
110.
|
d
|
120.
|
d
|
130.
|
a
|
||
81.
|
C
|
91.
|
c
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101.
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d
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111.
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d
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121.
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d
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131.
|
a
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||
82.
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B
|
92.
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c
|
102.
|
a
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112.
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a
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122.
|
c
|
132.
|
d
|
||
83.
|
C
|
93.
|
a
|
103.
|
a
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113.
|
a
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123.
|
a
|
133.
|
d
|
||
84.
|
B
|
94.
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d
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104.
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c
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114.
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b
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124.
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c
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134.
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a
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87. c $216,000
– $200,000 = $16,000.
88. d $1,176,000
+ $365,000 – $42,000= $1,499,000.
89. c $365,000
– $42,000 = $323,000.
90. c $54,000.
91. c $242,000
– $28,000 = $214,000.
92. c $36,200.
93. a $148,000
+ $9,400 – $1,150 = $156,250.
94. d $9,400
– $1,150 = $8,250.
95. a $222,000
– $14,100 – $1,750= $234,350.
96. d $14,100
- $1,750 = $12,350.
97. b LF 3,000 × $15 = ($45,000 ÷ $80,000) × $50,000 = $28,125
1B 7,000 × $5 = $35,000; $35,000 + $45,000 = $80,000
(1,000
× $15) – ($28,125 × 1,000/3,000) = $5,625.
98. b CF 3,000 × $12 = ($36,000 ÷ $64,000) × $40,000 = $22,500
3B 7,000 × $4 = $28,000; $28,000 + $36,000 = $64,000
(1,000
× $12) – ($22,500 × 1,000/3,000) = $4,500.
99. c Item # of Items × Price
M 4,000
× $2.50 = 10,000 10 ÷ 50 × $48,000 = $9,600 ÷ 4,000 = $2.40
N 2,000
× $8.00 = 16,000 16 ÷ 50 × $48,000 = $15,360 ÷ 2,000 = $7.68
O 6,000
× $4.00 = 24,000 24 ÷ 50 × $48,000 = $23,040 ÷ 6,000 =
$3.84
50,000
100. b (2,500
× $0.25) + (5,500 × $0.60) + (500 × $1.20) = $4,525;
[(2,500 × $0.25) ÷ $4,525] × $3,000 = $414 ÷ 2,500 = $0.166.
[(2,500 × $0.25) ÷ $4,525] × $3,000 = $414 ÷ 2,500 = $0.166.
101. d (2,500
× $0.25) + (5,500 × $0.60) + (500 × $1.20) = $4,525;
[(5,500 × $0.60) ÷ $4,525] × $3,000 = $2,188 ÷ 5,500 = $0.398.
[(5,500 × $0.60) ÷ $4,525] × $3,000 = $2,188 ÷ 5,500 = $0.398.
102. a (2,500
× $0.25) + (5,500 × $0.60) + (500 × $1.20) = $4,525;
[(500 × $1.20) ÷ $4,525] × $3,000 = $398 ÷ 500 = $0.796.
[(500 × $1.20) ÷ $4,525] × $3,000 = $398 ÷ 500 = $0.796.
103. a $2.5
million – $2.3 million = $200,000.
104. c $2.5
million – $2.2 million = $300,000.
105. c ($4.00
– $3.10) × 100,000 = $90,000.
DERIVATIONS —
Computational (cont.)
No. Answer Derivation
106. c No gain or loss since 12/31 price
($5.60) > contract price ($5,00).
107. b ($5.00
– $4.60) × 1,000 = $400.
108. a ($50,000
+ $150,000) – ($300,000 ÷ 5/3) – $3,000 = $17,000.
109. a ($100,000
+ $300,000) – ($600,000 ÷ 5/3) – $6,000 = $34,000.
110. d (1
+ .2)C = 1,980,000; C = $1,650,000.
111. d COGS: July = $2,040,000 ÷ 1.2 = $1,700,000
Aug.
= $2,160,000 ÷ 1.2 = $1,800,000
July's
purchase = ($1,700,000 × .7) + ($1,800,000 × .3) = $1,730,000.
112. a $360,000
+ ($420,000 – $240,000) = $540,000.
113. a 

114. b COGS
= $300,000 ÷ 1.25 = $240,000
($220,000
+ $172,000 – $8,000) – $240,000 = $144,000.
115. c COGS
= $2,000,000 × .75 = $1,500,000
$800,000
+ $1,600,000 – $1,500,000 = $900,000.
116. b $900,000
– ($800,000 × .80) = $260,000.
$300,000
117. a $50,000 + $250,000 – ————— = $60,000.
1.25
118. c 25%
÷ (100% – 25%) = 33%.
119. c $650,000
– ($650,000 ÷ 1.20) = $108,333.
120. d ($320,000
+ $85,000) – [$250,000 × (1 – .40)] = $255,000.
121. d ($680,000
+ $165,000) – [$360,000 × (1 – .40)] = $629,000.
122. c $1,650,000
+ $683,000 + $78,000 – [$1,210,000 × (1 – .30)] = $1,564,000.
123. a $198,000
+ $1,100,000 + $24,000 – $1,050,000 – $36,000 = $236,000;
($130,000 + $685,000 + $43,000) ÷ ($198,000 + $1,100,000 + $24,000) = .649;
$236,000 × .649 = $153,164.
($130,000 + $685,000 + $43,000) ÷ ($198,000 + $1,100,000 + $24,000) = .649;
$236,000 × .649 = $153,164.
124. c $99,000
+ $865,600 + $69,000 – $811,000 = $222,600;
($65,500 + $568,000 + $26,500) ÷ ($99,000 + $865,600 + $69,000) = 63.9%;
$222,600 × .639 = $142,241.
($65,500 + $568,000 + $26,500) ÷ ($99,000 + $865,600 + $69,000) = 63.9%;
$222,600 × .639 = $142,241.
DERIVATIONS —
Computational (cont.)
No. Answer Derivation
125. b $326,900 + $1,386,100 + $2,000 –
$1,302,000 – $96,300 = $316,700;
($265,600 + $1,068,600 + $63,900) ÷ ($326,900 + $1,386,100 + $2,000) = 81.5%;
$316,700 × .815 = $258,111.
($265,600 + $1,068,600 + $63,900) ÷ ($326,900 + $1,386,100 + $2,000) = 81.5%;
$316,700 × .815 = $258,111.
126. b Cost: $30,000 + $145,000 + $2,500 = $177,500.
Retail: $50,000 + $200,000 + $8,500 = $258,500.
127. b $70,000
+ $320,000 + $20,000 – $14,000 – $336,000 = $60,000.
128. a Cost: $49,000 + $224,000 + $6,000 = $279,000.
Retail: $70,000 + $320,000 + $20,000 = $410,000.
129. b Conceptual.
130. a $3,600
+ $114,000 + $18,000 – $4,000 – $70,200 – $1,600 – $2,800 – $2,600
=
$54,400.
131. a $3,600
+ $94,000 + $18,000 – $4,000 – $70,200 – $1,600 – $2,800 – $2,600
=
$34,400.
132. d Cost: $78,000
+ $295,000 + $5,000 = $378,000.
Retail: $122,000 + $415,000 + $15,000 = $552,000.
133. d $122,000
+ $415,000 – $2,000 + $15,000 – $20,000 – $390,000 = $140,000.
134. a $140,000
× .685 = $95,900.
135. c $375,000
÷ [($60,000 + $90,000) ÷ 2] = 5; 365 ÷ 5 = 73.0.
136. c $385,000
÷ [($60,000 + $80,000) ÷ 2] = 5.5; 365 ÷ 5.5 = 66.4.
137. b
$600,000 ÷ [($80,000 + $120,000) ÷ 2] = 6 times
138. d $1,879,400 ÷ [($360,000 + $411,000) ÷
2] = 4.88.
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