Exam 9: Inventories: Additional Issues

Lacy's Linen Mart uses the average cost retail method to estimate inventories.Data for the first six months of 2016 include: beginning inventory at cost and retail were $60,000 and $120,000,net purchases at cost and retail were $312,000 and $480,000,and sales during the first six months totaled $490,000.The estimated inventory at June 30,2016,would be:

Under the conventional retail method,the denominator in the cost-to-retail percentage includes:

On July 8,a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation.The following information is available: What is the estimated inventory on July 8 immediately prior to the fire?

On March 17,2016,a flood destroyed the entire inventory of Beatty Co.The following information is available from its accounting records: Required: Compute the estimated cost of inventory lost in the flood.

DK Super Stores Inc.uses the average cost retail method to estimate its ending inventory.Information at June 30,2016,is as follows: Required: Compute the cost-to-retail percentage used by DK.

Estimated ending inventory at retail is:

To the nearest thousand,estimated ending inventory using the conventional retail method is:

Billingsly Products uses the conventional retail method to estimate its ending inventories.The following data has been summarized for the year 2016: Required: Estimate the ending inventory as of December 31,2016.

On July 5,2016,a fire destroyed the entire inventory of Kinard Music Mart.The following information is available from its accounting records: Required: Compute the estimated cost of inventory lost in the fire.

In the year 2016,the internal auditors of Goofy Co.discovered that goods costing $25 million that were purchased in December of 2015 were recorded for $20 million.The goods were properly measured in the December 31,2015,ending physical inventory. Required: Prepare the journal entry needed in 2016 to correct the error.Also,briefly describe any other measures Goofy would take in connection with correcting the error.(Ignore income taxes. )

In applying the lower of cost and net realizable value rule,the inventory of skis would be valued at:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

The conventional cost-to-retail percentage (rounded)is:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

The following disclosure note appeared in the 2016 annual report to shareholders of Upton Systems Inc. Inventories are stated at the lower of cost and net realizable value.Cost is computed using standard cost,which approximates actual cost,on a first-in,first-out basis.The Company provides inventory allowances based on excess and obsolete inventories. Another disclosure note in the annual report stated: The Company recorded a provision for inventory,including purchase commitments,totaling $1.40 billion during fiscal 2016,which included an additional excess inventory charge as previously discussed.This additional excess inventory charge was due to a sudden and significant decrease in demand for the Company's products and was calculated in accordance with the Company's accounting policy. A skeptic may conclude that Upton's policy and practices threaten earnings quality.Discuss how it may do so.

Current period cost-to-retail percentage is:

Cloverdale,Inc. ,uses the conventional retail inventory method to account for inventory.The following information relates to current year's operations: What amount should be reported as cost of goods sold for the year?

Green Acres Co.has elected to use the dollar-value LIFO retail method to value its inventory.The following data has been accumulated from the accounting records: Pertinent retail price indexes: Required: Estimate the cost of ending inventory for December 31,2016.

At what amount will Johnson record the inventory purchased on February 1,2017?

Listed below are 10 terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the number for the correct term.