Question :
111. A company’s warehouse was destroyed by a tornado March 15. : 1225844
111. A company’s warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged:
The company’s average gross profit ratio is 35%. What is the estimated cost of the lost inventory?
A. $9,705.
B. $25,995.
C. $29,250.
D. $44,000.
E. $45,000.
112. A company reported the following information regarding its inventory.
Beginning inventory: cost is $70,000; retail is $130,000
Net purchases: cost is $65,000; retail is $120,000
Sales at retail: $145,000
The year-end inventory showed $105,000 worth of merchandise available at retail prices. What is the cost of the ending inventory?
A. $48,300.
B. $56,700.
C. $56,441.
D. $78,300.
E. $105,000.
113. On September 30 a company needed to estimate its ending inventory to prepare its third quarter financial statements. The following information is available:
Beginning inventory, July 1: $4,000
Net sales: $40,000
Net purchases: $41,000
The company’s gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would be:
A. $4,000.
B. $5,000.
C. $21,000.
D. $25,000.
E. $34,000.
114. A company that has operated with a 30% average gross profit ratio for a number of years had $100,000 in sales during the first quarter of this year. If it began the quarter with $18,000 of inventory at cost and purchased $72,000 of inventory during the quarter, its estimated ending inventory by the gross profit method is:
A. $30,000.
B. $21,000.
C. $20,000.
D. $18,000.
E. $27,000.
115. On December 31, a company needed to estimate its ending inventory to prepare its fourth quarter financial statements. The following information is currently available:
Inventory as of October 1: $12,500
Net sales for fourth quarter: $40,000
Net purchases for fourth quarter: $27,500
This company typically achieves a gross profit ratio of 15%. Ending Inventory under the gross profit method would be:
A. $4,000.
B. $6,000.
C. $10,000.
D. $16,000.
E. $34,000.
116. Interim statements:
A. Are required by the Congress.
B. Are necessary to achieve full disclosure about a business’s operations.
C. Are usually monthly or quarterly statements prepared for periods of less than one year.
D. Require the use of the perpetual method for inventories.
E. Cannot be prepared if the company follows the conservatism principle.
117. Jackson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:
A. $60,000
B. $180,000
C. $30,000
D. $90,000
E. Impossible to determine from the information provided.
118. Georgia Peach Company reported net sales in June of the current year of $1,000,000. At the beginning of June, the company reported beginning inventory of $368,000. Cost of goods purchased during June amounted to $217,500. The company reported ending inventory at the end of June of $226,750.
The company’s gross profit rate for June of the current year was:
A. 35.9%
B. 18.8%
C. 81.2%
D. 64.1%
E. Impossible to determine from the information provided.
119. On July 24 of the current year, The Georgia Peach Company experienced a natural disaster that destroyed the company’s entire inventory. At the beginning of July, the company reported beginning inventory of $226,750. Inventory purchased during July (until the date of the disaster) was $197,800. Sales for the month of July through July 24 were $642,500. Assuming the company’s typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the natural disaster.
A. $212,275
B. $103,300
C. $217,950
D. $321,250
E. $157,788
120. Flaxco purchases inventory from overseas and incurs the following costs: the cost of the merchandise is $50,000, credit terms are 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Flaxco paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions. Compute the cost that should be assigned to the inventory.
A. $50,000
B. $53,000
C. $52,000
D. $51,500
E. $53,200
