116.The method of estimating inventory that uses records of the selling prices of the merchandise is called
a.retail method
b.gross profit method
c.inventory turnover method
d.average cost method
117.On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using theretail method?
|
Cost
|
Retail
|
May 1
|
Merchandise inventory
|
$125,000
|
$166,667
|
May 1-31
|
Purchases
|
235,000
|
313,333
|
May 1-31
|
Sales
|
|
230,000
|
|
|
|
|
a. $250,000
b. $360,000
c. $172,500
d. $187,500
118.If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September30, based on the following data?
Sep. 1
|
Merchandise inventory (at cost)
|
$125,000
|
Sep. 1-30
|
Purchases, net (at cost)
|
300,000
|
Sep. 1-30
|
Sales, net
|
150,000
|
a.$320,000b.$192,500c.$275,000d.$105,000
|
|
|
119.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 financialaccounting period.
120.Garrison Company uses the retail method of inventory costing. It started the year with an inventory that had aretail cost of $45,000. During the year, Garrison purchased an inventory with a retail sales value of$300,000. After performing a physical inventory, Garrison calculated the inventory at retail to be $80,000. Themark 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
121.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 the inventory
c.the company has not kept up with its inventory records
d.the company is preparing annual financial statements
122.Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevenspurchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. Theestimated ending inventory as of January 31 is
a. $58,000
b. $91,000
c. $107,000
d. $69,300
123.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. $35b. $80c. $115d. $25
124.If a company values inventory at the lower of cost or market, which of the following is the value of merchandiseinventory 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