Question :
1) An inventory count should be done at least once : 1212661
1) An inventory count should be done at least once per year.
2) The gross margin method is an estimate of inventory sometimes used to estimate losses for insurance claims due to a fire or natural disaster.
3) To apply the retail method of estimating the cost of inventory the business must know both the total cost and total selling price of its’ net purchases.
4) The following data are for Fern’s Florist Shop for the first seven months of its fiscal year:
Beginning inventory
$53,500
Purchases
75,500
Net sales revenue
93,700
Normal gross margin percent
30%
What is the estimated ending inventory?
A) $28,110
B) $65,590
C) $100,890
D) $63,410
Table 6-3
Cost
Selling Price
Beginning inventory
$ 50,400
$ 67,900
Purchases
128,500
170,600
Goods available for sale
$178,900
238,500
Ending inventory at selling price (retail) $ 53,500
5) Referring to Table 6-3, in arriving at the estimated ending inventory at cost, using the retail method, the retail ratio to be used is:
A) 75%
B) 78%
C) 133%
D) 68%
6) Referring to Table 6-3, the estimated ending inventory at cost, using the retail method, is:
A) $36,380
B) $39,050
C) $71,155
D) $40,125
7) Using the gross margin method, find the ending inventory value when purchases were $105,000, net sales revenue was $128,000, beginning inventory was $31,000 and cost of goods sold historically runs 58% of net sales revenue.
A) $82,240
B) $61,760
C) $23,000
D) $54,000
8) Bathworks Company wants to estimate its ending inventory based on the following data: beginning inventory of $70,000, net sales revenue of $195,000, purchases of $140,000, and a normal gross margin percent of 40%. Ending inventory is equal to:
A) $78,000
B) $117,000
C) $93,000
D) $132,000
9) Assume a beginning inventory of $28,000, ending inventory of $47,000, and purchases of $110,000. If the gross margin percent is 60%, how much is net sales revenue?
A) $168,333
B) $101,000
C) $252,500
D) $227,500
10) Callahan Computers stores its inventory in a warehouse that burned to the ground in late November, 2012. Their sales office was at a different location. In order to file a claim with their insurance, the owners ask you to estimate the inventory in the warehouse. The following information is available:
Beginning inventory
$375,500
Purchases through November 30
470,250
Net sales revenue through November 31
793,000
The company’s gross profit has historically been 40% of Net sales revenue. Estimate the value of the inventory destroyed in the fire using the gross profit method.
A) $369,950
B) $528,550
C) $410,000
D) $388,450
Match the following.
A) gross margin method
B) retail method
C) gross margin percentage
11) One of two methods used to estimate ending inventory
12) A method of estimating ending inventory based on the total cost and total selling price of opening inventory and net purchases
13) The relationship of gross margin to net sales.
