Dryer Corporation had the following amounts, all at retail: \[\begin{array} { l r l r } \text { Beginning inventory } & \$ 3,600 & \text { Purchases } & \$ 100,000 \\ \text { Purchase returns } & 6,000 & \text { Net markups } & 18,000 \\ \text { Abnormal shortage } & 4,000 & \text { Net markdowns } & 2,800 \\ \text { Sales } & 72,000 & \text { Sales returns } & 1,800 \\ \text { Employee discounts } & 1,600 & \text { Normal shortage } & 2,600 \end{array}\] What is Dryer's ending inventory at retail?

A) $34,400. B) $36,000. C) $37,600. D) $38,400 A) $34,400. B) $36,000. C) $37,600. D) $38,400

Use the following information for questions Trent Co.uses the retail inventory method.The following information is available for the current year. $\begin{array}{lcc}&\text { Cost }& \text { Retail }\\ \text { Beginning inventory } & \$ 78,000 & \$ 122,000 \\ \text { Purchases } & 295,000 & 415,000 \\ \text { Freight-in } & 5,000 & - \\ \text { Employee discounts } & - & 2,000 \\ \text { Net markups } & - & 15,000 \\ \text { Net Markdowns } & - & 20,000 \\ \text { Sales } & - & 390,000 \end{array}$ -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. A) $95,900. B) $94,920. C) $98,000. D) $102,480.

Use the following information for questions Baker Company, which uses the retail LIFO method to determine inventory cost, has provided the following information for 2007: $\begin{array}{lrr}&\text { Cost }& \text { Retail }\\ \text { Inventory, } 1 / 1 / 07 & \$ 94,000 & \$ 140,000 \\ \text { Net purchases } & 378,000 & 562,000 \\ \text { Net markups } & & 68,000 \\ \text { Net markdowns } & & 30,000 \\ \text { Net sales } & & 530,000 \end{array}$ -Assuming stable prices (no change in the price index during 2007), what is the cost of Baker's inventory at December 31, 2007?

A) $128,100. B) $138,100. C) $136,000. D) $132,300. A) $128,100. B) $138,100. C) $136,000. D) $132,300.

Use the following information for questions Sloan Company, a wholesaler, budgeted the following sales for the indicated months: $\begin{array}{lrrr}&\text { June}&\text { July }&\text {Auqust }\\ \text { Sales on account } & \$ 1,800,000 & \$ 1,840,000 & \$ 1,900,000 \\ \text { Cash sales } & 180,000 & 200,000 & 260,000\\\text { Total sales } & \$ 1,980,000 & \$ 2,040,000 &\$ 2,160,000\\ \end{array}$ 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. -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. A) $1,440,000. B) $1,500,000. C) $1,520,000. D) $1,650,000.

The following information is available for October for Horton Company. $\begin{array}{lr} \text { Beginning inventory } & \$ 100,000 \\ \text { Net purchases } & 300,000 \\ \text { Net sales } & 600,000 \\ \text { Percentage markup on cost } & 66.67 \% \end{array}$ A fire destroyed Horton'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. A) $34,000. B) $154,000. C) $160,000. D) $200,000.

The following information is available for October for Jordan Company. $\begin{array}{lr} \text { Beginning inventory } & \$ 50,000 \\ \text { Net purchases } & 150,000 \\ \text { Net sales } & 300,000 \\ \text { Percentage markup on cost } & 66.67 \% \end{array}$ A fire destroyed Jordan'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. A) $17,000. B) $77,000. C) $80,000. D) $100,000.

Marr Corporation has two products in its ending inventory, each accounted for at the lower of cost or market.A profit margin of 30% on selling price is considered normal for each product.Specific data with respect to each product follows: $\begin{array}{lrr}&\text { Product \#1}&\text { Product \#2 }\\ \text { Historical cost } & \$ 40.00 & \$ 70.00 \\ \text { Replacement cost } & 45.00 & 54.00 \\ \text { Estimated cost to dispose } & 10.00 & 26.00 \\ \text { Estimated selling price } & 80.00 & 130.00 \end{array}$ In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Marr use for products #1 and #2, respectively?

A) $40.00 and $65.00. B) $46.00 and $65.00. C) $46.00 and $60.00. D) $45.00 and $54.00. A) $40.00 and $65.00. B) $46.00 and $65.00. C) $46.00 and $60.00. D) $45.00 and $54.00.

Miller, 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: \[\begin{array} { l r } \text { Inventory, March 1 } & \$ 220,000 \\ \text { Purchases } & 172,000 \\ \text { Purchase returns } & 8,000 \\ \text { Sales during March } & 300,000 \end{array}\] The estimate of the cost of inventory at March 31 would be

A) $84,000. B) $144,000. C) $159,000. D) $112,000. A) $84,000. B) $144,000. C) $159,000. D) $112,000.

Exam 9: Inventories: Additional Valuation Issues

Dryer 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 Dryer's ending inventory at retail?

(Multiple Choice)

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Question 21

Pettengal Corporation sells its product, a rare metal, in a controlled market with a quoted price applicable to all quantities.The total cost of 5,000 pounds of the metal now held in inventory is $150,000.The total selling price is $350,000, and estimated costs of disposal are $5,000.At what amount should the inventory of 5,000 pounds be reported in the balance sheet?

(Multiple Choice)

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Question 22

A basket purchase occurs when a company agrees to buy inventory weeks or months in advance.

(True/False)

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Question 23

A disadvantage of the gross profit method is that it uses past percentages in determining the markup.

(True/False)

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Question 24

Use the following information for questions Trent 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 -The approximate cost of the ending inventory by the conventional retail method is

(Multiple Choice)

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Question 25

Remington Company sells product 1976NLC for $40 per unit.The cost of one unit of 1976NLC is $36, and the replacement cost is $34.The estimated cost to dispose of a unit is $8, and the normal profit is 40%.At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market?

(Multiple Choice)

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Question 26

The gross profit method of inventory valuation is invalid when

(Multiple Choice)

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Question 27

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

(Multiple Choice)

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Question 28

When using dollar-value LIFO, if the incremental layer was added last year, it should be multiplied by

(Multiple Choice)

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Question 29

Designated market value

(Multiple Choice)

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Question 30

The 2007 financial statements of Wert 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.Wert's inventory turnover ratio for 2007 is

(Multiple Choice)

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Question 31

Use the following information for questions Baker Company, which uses the retail LIFO method to determine inventory cost, has provided the following information for 2007: Cost Retail Inventory, 1/1/07 \ 94,000 \ 140,000 Net purchases 378,000 562,000 Net markups 68,000 Net markdowns 30,000 Net sales 530,000 -Assuming stable prices (no change in the price index during 2007), what is the cost of Baker's inventory at December 31, 2007?

(Multiple Choice)

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Question 32

Use the following information for questions Sloan Company, a wholesaler, budgeted the following sales for the indicated months: June July Auqust 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. -The cost of goods sold for the month of June is anticipated to be

(Multiple Choice)

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Question 33

The following information is available for October for Horton Company. Beginning inventory \ 100,000 Net purchases 300,000 Net sales 600,000 Percentage markup on cost 66.67\% A fire destroyed Horton'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

(Multiple Choice)

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Question 34

The following information is available for October for Jordan Company. Beginning inventory \ 50,000 Net purchases 150,000 Net sales 300,000 Percentage markup on cost 66.67\% A fire destroyed Jordan'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

(Multiple Choice)

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Question 35

Marr Corporation has two products in its ending inventory, each accounted for at the lower of cost or market.A profit margin of 30% on selling price is considered normal for each product.Specific data with respect to each product follows: Product \#1 Product \#2 Historical cost \ 40.00 \ 70.00 Replacement cost 45.00 54.00 Estimated cost to dispose 10.00 26.00 Estimated selling price 80.00 130.00 In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Marr use for products #1 and #2, respectively?

(Multiple Choice)

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Question 36

In the retail inventory method, the term markup means a markup on the original cost of an inventory item.

(True/False)

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Question 37

Assuming that the LIFO inventory method is used, that the beginning inventory is the base inventory when the index was 100, and that the index at year end is 112, the ending inventory at dollar-value LIFO retail cost is

(Multiple Choice)

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Question 38

Miller, 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

(Multiple Choice)

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Question 39

The gross profit method can be used to approximate the dollar amount of inventory on hand.

(True/False)

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Question 40

A basket purchase occurs when a company agrees to buy inventory weeks or months in advance.

A disadvantage of the gross profit method is that it uses past percentages in determining the markup.

Remington Company sells product 1976NLC for $40 per unit.The cost of one unit of 1976NLC is $36, and the replacement cost is $34.The estimated cost to dispose of a unit is $8, and the normal profit is 40%.At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market?

The gross profit method of inventory valuation is invalid when

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

When using dollar-value LIFO, if the incremental layer was added last year, it should be multiplied by

Designated market value

The 2007 financial statements of Wert 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.Wert's inventory turnover ratio for 2007 is

In the retail inventory method, the term markup means a markup on the original cost of an inventory item.

Assuming that the LIFO inventory method is used, that the beginning inventory is the base inventory when the index was 100, and that the index at year end is 112, the ending inventory at dollar-value LIFO retail cost is

The gross profit method can be used to approximate the dollar amount of inventory on hand.

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

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