111. The method of computing inventory that uses records of the selling prices of the merchandise is called A. retail methodB. last-in, first-outC. first-in, first-outD. average cost
112. On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?
Cost
Retail
May 1
Merchandise Inventory
$125,000
$166,667
May 1-31
Purchases (net)
235,000
313,333
May 1-31
Sales (net)
230,000
A. $250,000B. $360,000C. $172,500D. $187,500
113. If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?
Sep. 1
Merchandise inventory
$ 125,000
Sep. 1-30
Purchases (net)
300,000
Sep. 1-30
Sales (net)
150,000
A. $320,000B. $192,500C. $275,000D. $105,000
114. 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 financial accounting period.
115. Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory cost at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost. A. $160,000B. $80,000C. $40,000D. $45,000
116. 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 their inventory.C. the company has not kept up with their inventory records.D. the company is preparing annual financial statements.
117. Stevens Company started the year with an inventory cost of $145,000. During the month of January they purchased inventory that cost of $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is A. $58,000B. $91,000C. $107,000D. $69,300
118. 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
119. If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory 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. $6,960B. $7,700C. $6,540D. $7,280
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