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The method of computing inventory that uses records of the selling prices of the merchandi

The method of computing inventory that uses records of the selling prices of the merchandise is called  
A. retail method
B. last-in, first-out
C. first-in, first-out
D. average cost

 

112. On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?
 

 

 

Cost

Retail

May 1

Merchandise Inventory

$125,000

$166,667

May 1-31

Purchases (net)

235,000

313,333

May 1-31

Sales (net)

 

230,000

 

 

 

 

 
A. $250,000
B. $360,000
C. $172,500
D. $187,500

 

113. If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?
 

Sep. 1

Merchandise inventory

$  125,000

Sep. 1-30

Purchases (net)

300,000

Sep. 1-30

Sales (net)

150,000

 

 

 

 
A. $320,000
B. $192,500
C. $275,000
D. $105,000

 

114. All of the following are reasons to use an estimated method of costing inventory except:
 
A. Perpetual inventory records are not maintained.
B. Purchase records are not maintained.
C. A disaster has destroyed the inventory records and the inventory.     
D. Interim financial statements are required but physical inventory is only taken at the end of the financial accounting period.

 

115. Garrison Company uses the retail method of inventory costing.  They started the year with an inventory that had a retail cost of $45,000.  During the year they purchased an inventory with a retail cost of $300,000.  After performing a physical inventory, they calculated their inventory cost at retail to be $80,000.  The mark up is 100% of cost.  Determine the ending inventory at its estimated cost.
 
A. $160,000
B. $80,000
C. $40,000
D. $45,000

 

116. A company will most likely use an estimated method of determining inventory when 
A. the company decides not to do a physical inventory.
B. a natural disaster has destroyed most of their inventory.
C. the company has not kept up with their inventory records.
D. the company is preparing annual financial statements.

 

117. Stevens Company started the year with an inventory cost of $145,000.  During the month of January they purchased inventory that cost of $53,000.  January sales totaled $140,000.  Estimated gross profit is 35%.  The estimated ending inventory as of January 31 is 
A. $58,000
B. $91,000
C. $107,000
D. $69,300

 

118. Determine the total value of the merchandise using Net Realizable Value:
 

Item

Quantity

Selling Price

Commission

Doll

10

$7

$2

Horse

5

  9

  3

 

 

 

 

 
A. $35
B. $80
C. $115
D. $25

 

119. If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole.
 

Item

Inventory Quantity

Unit Cost Price

Unit Market Price

Product C

420

$6

$5

Product D

370

12

14

 

 

 

 

 
A. $6,960
B. $7,700
C. $6,540
D. $7,280

 

 

 

Dec 09 2019 View more View Less

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