Deck 9: Inventories: Additional Valuation Issues

Question 1

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

Answer 1

True

Question 2

When the conventional retail method includes both net markups and net markdowns in the cost-to-retail ratio, it approximates a lower-of-cost-or-market valuation.

Answer 2

False

Question 3

If the contract price on a noncancelable purchase commitment exceeds the market price, the buyer should record any expected losses on the commitment in the period in which the market decline takes place.

Answer 3

True

Question 4

In a basket purchase, the cost of the individual assets acquired is determined on the basis of their relative sales value.

Question 5

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

Question 6

The lower-of-cost-or-market method is used for inventory despite being less conservative than valuing inventory at market value.

Question 7

When a buyer enters into a formal, noncancelable purchase contract, an asset and a liability are recorded at the inception of the contract.

Question 8

In most situations, the gross profit percentage is stated as a percentage of cost.

Question 9

Application of the lower-of-cost-or-market rule results in inconsistency because a company may value inventory at cost in one year and at market in the next year.

Question 10

The LIFO retail method assumes that markups and markdowns apply only to the goods purchased during the period.

Question 11

The purpose of the "floor" in lower-of-cost-or-market considerations is to avoid overstating inventory.

Question 12

A company should abandon the historical cost principle when the future utility of the inventory item falls below its original cost.

Question 13

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

Question 14

Most purchase commitments must be recorded as a liability.

Question 15

The inventory turnover ratio is computed by dividing the cost of goods sold by the ending inventory on hand.

Question 16

A reason for valuing inventory at net realizable value is that sometimes it is too difficult to obtain the cost figures.

Question 17

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

Question 18

In the retail inventory method, abnormal shortages are deducted from both the cost and retail amounts and reported as a loss.

Question 19

GAAP requires reporting inventory at net realizable value, even if above cost, whenever there is a controlled market with a quoted price applicable to all quantities.

Question 20

The average days to sell inventory represents the average number of days' sales for which a company has inventory on hand.

Question 21

Which statement is not true about the gross profit method of inventory valuation?

A)It may be used to estimate inventories for interim statements.
B)It may be used to estimate inventories for annual statements.
C)It may be used by auditors.
D)None of these.

Question 22

Designated market value

A)is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin.
B)should always be equal to net realizable value.
C)may sometimes exceed net realizable value.
D)should always be equal to net realizable value less a normal profit margin.

Question 23

In no case can "market" in the lower-of-cost-or-market rule be more than

A)estimated selling price in the ordinary course of business.
B)estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.
C)estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin.
D)estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.

Question 24

When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"?

A)Net realizable value
B)Net realizable value less a normal profit margin
C)Current replacement cost
D)Discounted present value

Question 25

If a material amount of inventory has been ordered through a formal purchase contract at the balance sheet date for future delivery at firm prices,

A)this fact must be disclosed.
B)disclosure is required only if prices have declined since the date of the order.
C)disclosure is required only if prices have since risen substantially.
D)an appropriation of retained earnings is necessary.

Question 26

Lower-of-cost-or-market

A)is most conservative if applied to the total inventory.
B)is most conservative if applied to major categories of inventory.
C)is most conservative if applied to individual items of inventory.
D)must be applied to major categories for taxes.

Question 27

In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000.Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000.The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported

A)as a valuation account to Inventory on the balance sheet.
B)as a current liability.
C)as an appropriation of retained earnings.
D)on the income statement.

Question 28

Recording inventory at net realizable value is permitted, even if it is above cost, when there are no significant costs of disposal involved and

A)the ending inventory is determined by a physical inventory count.
B)a normal profit is not anticipated.
C)there is a controlled market with a quoted price applicable to all quantities.
D)the internal revenue service is assured that the practice is not used only to distort reported net income.

Question 29

The credit balance that arises when a net loss on a purchase commitment is recognized should be

A)presented as a current liability.
B)subtracted from ending inventory.
C)presented as an appropriation of retained earnings.
D)presented in the income statement.

Question 30

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

A)net realizable value.
B)original cost.
C)market value.
D)net realizable value less a normal profit margin.

Question 31

Net realizable value is

A)acquisition cost plus costs to complete and sell.
B)selling price.
C)selling price plus costs to complete and sell.
D)selling price less costs to complete and sell.

Question 32

Inventory may be recorded at net realizable value if

A)there is a controlled market with a quoted price.
B)there are no significant costs of disposal.
C)the inventory consists of precious metals or agricultural products.
D)all of these.

Question 33

A major advantage of the retail inventory method is that it

A)provides reliable results in cases where the distribution of items in the inventory is different from that of items sold during the period.
B)hides costs from competitors and customers.
C)gives a more accurate statement of inventory costs than other methods.
D)provides a method for inventory control and facilitates determination of the periodic inventory for certain types of companies.

Question 34

Which of the following is not a basic assumption of the gross profit method?

A)The beginning inventory plus the purchases equal total goods to be accounted for.
B)Goods not sold must be on hand.
C)If the sales, reduced to the cost basis, are deducted from the sum of the opening inventory plus purchases, the result is the amount of inventory on hand.
D)The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period.

Question 35

An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00.It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00.Which of the following statements is not true?

A)The cost of sales of the following year will be understated.
B)The current year's income is understated.
C)The closing inventory of the current year is understated.
D)Income of the following year will be understated.

Question 36

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

A)selling price will be less than their replacement cost.
B)replacement cost will be more than their net realizable value.
C)cost will be less than their replacement cost.
D)future utility will be less than their cost.

Question 37

When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?

A)Sales price
B)Net realizable value
C)Historical cost
D)Net realizable value reduced by a normal profit margin

Question 38

When the direct method is used to record inventory at market

A)there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.
B)a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline.
C)only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements.
D)the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold.

Question 39

Which of the following is true about lower-of-cost-or-market?

A)It is inconsistent because losses are recognized but not gains.
B)It usually understates assets.
C)It can increase future income.
D)All of these.

Question 40

The gross profit method of inventory valuation is invalid when

A)a portion of the inventory is destroyed.
B)there is a substantial increase in inventory during the year.
C)there is no beginning inventory because it is the first year of operation.
D)none of these.

Question 41

To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should

A)include markups but not markdowns.
B)include markups and markdowns.
C)ignore both markups and markdowns.
D)include markdowns but not markups.

Question 42

At a lump-sum cost of $48,000, Sealy Company recently purchased the following items for resale: $$\begin{array} { c c c } \text { Item }& \text { No. of Items Purchased } & \text { Resale Price Per Unit } \\\mathrm { M }& 4,000 & \$ 2.50 \\\mathrm { N } & 2,000 & 8.00 \\\mathrm { O }& 6,000 & 4.00\end{array}$$ 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

Question 43

Jermaine Dye 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 Dye 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.

Question 44

Which of the following is not a reason the retail inventory method is used widely?

A)As a control measure in determining inventory shortages
B)For insurance information
C)To permit the computation of net income without a physical count of inventory
D)To defer income tax liability

Question 45

Which of the following statements is false regarding an assumption of inventory cost flow?

A)The cost flow assumption need not correspond to the actual physical flow of goods.
B)The assumption selected may be changed each accounting period.
C)The FIFO assumption uses the earliest acquired prices to cost the items sold during a period.
D)The LIFO assumption uses the earliest acquired prices to cost the items on hand at the end of an accounting period.

Question 46

The average days to sell inventory is computed by dividing

A)365 days by the inventory turnover ratio.
B)the inventory turnover ratio by 365 days.
C)net sales by the inventory turnover ratio.
D)365 days by cost of goods sold.

Question 47

When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because

A)there may be no markdowns in a given year.
B)this tends to give a better approximation of the lower of cost or market.
C)markups are also ignored.
D)this tends to result in the showing of a normal profit margin in a period when no markdown goods have been sold.

Question 48

The retail inventory method is based on the assumption that the

A)final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
B)ratio of gross margin to sales is approximately the same each period.
C)ratio of cost to retail changes at a constant rate.
D)proportions of markups and markdowns to selling price are the same.

Question 49

Williamson 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 Williamson 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.

Question 50

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.

Question 51

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?

A)$145,000.
B)$150,000.
C)$345,000.
D)$350,000.

Question 52

When calculating the cost ratio for the retail inventory method,

A)if it is the conventional method, the beginning inventory is included and markdowns are deducted.
B)if it is the LIFO method, the beginning inventory is excluded and markdowns are deducted.
C)if it is the LIFO method, the beginning inventory is included and markdowns are not deducted.
D)if it is the conventional method, the beginning inventory is excluded and markdowns are not deducted.

Question 53

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?

A)$16.
B)$32.
C)$34.
D)$36.

Question 54

The inventory turnover ratio is computed by dividing the cost of goods sold by

A)beginning inventory.
B)ending inventory.
C)average inventory.
D)number of days in the year.

Question 55

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

A)last year's cost ratio and this year's index.
B)this year's cost ratio and this year's index.
C)last year's cost ratio and last year's index.
D)this year's cost ratio and last year's index.

Question 56

Paul Konerko Company sells product 2005WSC for $20 per unit.The cost of one unit of 2005WSC is $18, and the replacement cost is $17.The estimated cost to dispose of a unit is $4, and the normal profit is 40%.At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?

A)$8.
B)$16.
C)$17.
D)$18.

Question 57

An inventory method which is designed to approximate inventory valuation at the lower of cost or market is

A)last-in, first-out.
B)first-in, first-out.
C)conventional retail method.
D)specific identification.

Question 58

Which statement is true about the retail inventory method?

A)It may not be used to estimate inventories for interim statements.
B)It may not be used to estimate inventories for annual statements.
C)It may not be used by auditors.
D)None of these.

Question 59

Which of the following is not required when using the retail inventory method?

A)All inventory items must be categorized according to the retail markup percentage which reflects the item's selling price.
B)A record of the total cost and retail value of goods purchased.
C)A record of the total cost and retail value of the goods available for sale.
D)Total sales for the period.

Question 60

Joe Crede 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 $250,000.The total selling price is $600,000, and estimated costs of disposal are $10,000.At what amount should the inventory of 5,000 pounds be reported in the balance sheet?

A)$240,000.
B)$250,000.
C)$590,000.
D)$600,000.

Question 61

Gomez 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.Gomez's sales in its first year must have been

A)$540,000.
B)$660,000.
C)$180,000.
D)$600,000.

Question 62

Use the following information for questions
The following data concerning the retail inventory method are taken from the financial records of Stone Company. $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 49,000 & \$ 70,000 \\\text { Purchases } & 224,000 & 320,000 \\\text { Freight-in } & 6,000 & - \\\text { Net markups } & - & 20,000 \\\text { Net markdowns } & - & 14,000 \\\text { Sales } & - & 336,000\end{array}$

-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.

Question 63

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.

Question 64

Use the following information for questions
The following data concerning the retail inventory method are taken from the financial records of Stone Company. $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 49,000 & \$ 70,000 \\\text { Purchases } & 224,000 & 320,000 \\\text { Freight-in } & 6,000 & - \\\text { Net markups } & - & 20,000 \\\text { Net markdowns } & - & 14,000 \\\text { Sales } & - & 336,000\end{array}$

-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.

Question 65

On January 1, 2007, the merchandise inventory of Colaw, Inc.was $800,000.During 2007 Colaw 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 Colaw at December 31, 2007?

A)$400,000.
B)$500,000.
C)$900,000.
D)$1,500,000.

Question 66

During 2006, Reese 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 2007.Because a record harvest is predicted for 2007, the price per pound for cocoa beans had fallen to $3.10 by December 31, 2006. Of the following journal entries, the one which would properly reflect in 2006 the effect of the commitment of Reese Co.to purchase the 100,000 pounds of cocoa is

Question 67

Use the following information for questions
The following data concerning the retail inventory method are taken from the financial records of Stone Company. $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 49,000 & \$ 70,000 \\\text { Purchases } & 224,000 & 320,000 \\\text { Freight-in } & 6,000 & - \\\text { Net markups } & - & 20,000 \\\text { Net markdowns } & - & 14,000 \\\text { Sales } & - & 336,000\end{array}$

-Assuming that the LIFO inventory method were used in conjunction with the data and that the inventory at retail had increased during the period, then the computation of retail in the cost to retail ratio would

A)exclude both markups and markdowns and include beginning inventory.
B)include markups and exclude both markdowns and beginning inventory.
C)include both markups and markdowns and exclude beginning inventory.
D)exclude markups and include both markdowns and beginning inventory.

Question 68

The inventory account of Lance Company at December 31, 2007, included the following items: $\begin{array} { l } &\text { Inventory Amount}\\ \text { Merchandise out on consignment at sales price}&\\ \text {(including markup of \( 40 \% \) on selling price) }&\$15,000\\ \text {Goods purchased, in transit (shipped f.o.b. shipping point) }&12,000\\ \text { Goods held on consignment by Lance}&13,000\\ \text {Goods out on approval (sales price \( \$ 7,600 \), cost \( \$ 6,400 \) ) }&7,600\\\end{array}$
Based on the above information, the inventory account at December 31, 2007, should be reduced by

A)$20,200.
B)$22,600.
C)$32,200.
D)$32,000.

Question 69

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store.The following data are available: $\begin{array}{lr}\text { Sales, January } 1 \text { through April } 15 & \$ 300,000 \\\text { Inventory, January } 1 & 50,000 \\\text { Purchases, January } 1 \text { through April } 15 & 250,000 \\\text { Markup on cost } & 25 \%\end{array}$ The amount of the inventory loss is estimated to be

A)$60,000.
B)$30,000.
C)$75,000.
D)$50,000.

Question 70

Flynn Sales Company uses the retail inventory method to value its merchandise inventory.The following information is available for the current year: $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 30,000 & \$ 50,000 \\\text { Purchases } & 145,000 & 200,000 \\\text { Freight-in } & 2,500 & - \\\text { Net markups } & - & 8,500 \\\text { Net markdowns } & - & 10,000 \\\text { Employee discounts } & - & 1,000 \\\text { Sales } & - & 205,000\end{array}$ If the ending inventory is to be valued at the lower-of-cost-or-market, 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

Question 71

For 2007, cost of goods available for sale for Vale 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.

Question 72

A markup of 40% on cost is equivalent to what markup on selling price?

A)29%
B)40%
C)60%
D)71%

Question 73

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.

-Merchandise purchases for July are anticipated to be

A)$1,632,000.
B)$2,076,000.
C)$1,700,000.
D)$1,730,000.

Question 74

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.

Question 75

DT Corporation, a manufacturer of Mexican foods, contracted in 2007 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2008.By 12/31/07, the price per pound of the spice mixture had dropped to $4.60 per pound.In 2007, DT should recognize a a loss of $5,000.
B)a loss of $400.
C)no gain or loss.
D)a gain of $400.

Question 76

Use the following information for questions
The following data concerning the retail inventory method are taken from the financial records of Stone Company. $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 49,000 & \$ 70,000 \\\text { Purchases } & 224,000 & 320,000 \\\text { Freight-in } & 6,000 & - \\\text { Net markups } & - & 20,000 \\\text { Net markdowns } & - & 14,000 \\\text { Sales } & - & 336,000\end{array}$

-The ending inventory at retail should be

A)$74,000.
B)$60,000.
C)$64,000.
D)$42,000.

Question 77

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.

Question 78

AJ Corporation, a manufacturer of ethnic foods, contracted in 2007 to purchase 500 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2008.By 12/31/07, the price per pound of the spice mixture had risen to $5.60 per pound.In 2007, AJ should recognize

A)a loss of $2,500.
B)a loss of $300.
C)no gain or loss.
D)a gain of $300.

Question 79

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.

Question 80

Use the following information for questions
The following data concerning the retail inventory method are taken from the financial records of Stone Company. $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 49,000 & \$ 70,000 \\\text { Purchases } & 224,000 & 320,000 \\\text { Freight-in } & 6,000 & - \\\text { Net markups } & - & 20,000 \\\text { Net markdowns } & - & 14,000 \\\text { Sales } & - & 336,000\end{array}$

-Assuming no change in the price level if the LIFO inventory method were used in conjunction with the data, the ending inventory at cost would be

A)$42,600.
B)$42,000.
C)$40,800.
D)$43,200.