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61 terms

Chp 9 accounting

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In applying LCM, market cannot be
D. Greater than net realizable value
In applying LCM, market cannot be
A. Less than net realizable value minus a normal profit margin
Masterlink Co. in applying the LCM method, reports its inventory at net realizable value. Which of the following statements is correct
C. Yes No
The argument against the use of LCM is its lack of
C. Consistency
Montana Co has determined its year-end inventory on a FIFO basis to be 600000. Info pertaining to that inventory is as follows: What should be the carrying value of Montana's inventory
B. 520000
Data related to the inventories of Costco Medical Supply is presented below: In applying the LCM rule, the inventory of surgical equipment would be valued at:
C. 170
Costco In applying the LCM rule, the inventory of surgical supplies would be valued at:
C. 80
Costco In applying the LCM rule, the inventory of rehab equipment would be valued at:
D. 235
Costco In applying the LCM rule, the inventory of rehab supplies would be valued at:
D. 155
Data related to the inventories of Alpine Ski Equipment and Supplies is presented below: In applying the LCM rule, the inventory of skis would be valued at:
D. 126000
Alpine Ski Equipment In applying the LCM rule, the inventory of boots would be valued at:
C. 130000
Alpine Ski Equipment In applying the LCM rule, the inventory of apparel would be valued at:
B. 90000
Alpine Ski Equipment . In applying the LCM rule, the inventory of supplies would be valued at:
A. 45000
When using the gross profit method to estimate ending inventory, it is not necessary to know
C. Cost of goods sold
On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available: What is the estimated inventory on July 8 immediately prior to the fire?
D. 280000
So. California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2011. In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2011, $300,000; sales and purchases from January 1, 2011, to May 1, 2011, $1,300,000 and $875,000, respectively. So. California consistently reports a 40% gross profit. The estimated inventory on May 1, 2011, is:
C. 395000
Howard's Supply Co. suffered a fire loss on April 20, 2011. The company's last physical inventory was taken on January 30, 2011, at which time the inventory totaled $220,000. Sales from January 30 to April 20 were $600,000 and purchases during that time were $450,000. Howard's consistently reports a 30% gross profit. The estimated inventory loss is:
C. 250000
Coastal Shores Inc. (CSI) was completely destroyed by Hurricane Fred on August 5, 2011. At January 1, CSI reported an inventory of $170,000. Sales from January 1, 2011, to August 5, 2011, totaled $480,000 and purchases totaled $195,000 during that time. CSI consistently marks up its products 60% over cost to arrive at a selling price. The estimated inventory loss due to Hurricane Fred would be:
B. 65000
When computing the cost-to-retail percentage for the conventional retail method, included in the denominators are
C. Net markups, but not net markdowns
Included in the computation of the cost-to-retail percentage for the LIFO retail method are
A. Net markups and net markdowns
In calculating the cost-to-retail percentage for the retail method, the retail column will not include
D. Freight-in
Under the retail inventory method
A. A company measures inventory on its balance sheet by converting retail prices to cost
Under the conventional retail method, which of the following are not included in the denominator of the current period cost-to-retail conversion percentage?
D. Net markdowns
Under the LIFO retail method, which of the following are not included in the denominator of the cost-to-retail conversion percentage?
A. Freight-in
In determining the cost-to-retail percentage for the current year
A. Net markups are included
Fad City sells novel clothes which are subject to a great deal of price volatility. A recent item which cost $20 was marked up $12, marked down for a sale by $6 and then had a markdown cancellation of $3. The latest selling price is:
C. 29
Harvey's Junk Jewelry started business January 1, 2011, and uses the LIFO retail method to estimate ending inventory. Listed below is data accumulated for the year ended December 31, 2011:
D. 49800
Harvey's Junk Jewelry The denominator for the current period's cost-to-retail percentage is:
B. 73700
Harvey's Junk Jewelry The estimated ending inventory at retail is:
B. 25000
Harvey's Junk Jewelry To the nearest thousand, the estimated ending inventory at cost is:
A. 16000
Lacy's Linen Mart uses the retail method to estimate inventories. Data for the first six months of 2011 include: beginning inventory at cost and retail were $60,000 and $120,000, net purchases at cost and retail were $312,000 and $480,000, and sales during the first six months totaled $490,000. The estimated inventory at June 30, 2011, would be:
A. 68200
Hawkeye Auto Parts uses the retail method to estimate inventories. Data for the first six months of 2011 include: beginning inventory at cost and retail were $55,000 and $100,000, net purchases at cost and retail were $785,000 and $1,300,000, and sales during the first six months totaled $800,000. The estimated inventory at June 30, 2011, would be:
B. 360000
Marilee's Electronics uses a periodic inventory system and the average cost retail method to estimate ending inventory and cost of goods sold. The following data is available from the company records for the month of June 2011:The average cost-to-retail percentage is:
D. 55%
Marilee's Electronics To the nearest thousand, estimated ending inventory is:
A. 55000
Benny's Bed Co. uses a periodic inventory system and the average cost retail method to estimate ending inventory and cost of goods sold. The following data is available from the company records for the month of September 2011. The average cost-to-retail percentage is:
B 55.6%
Benny's Bed Co. To the nearest thousand, estimated ending inventory is:
D. None of the above is correct
Data below for the year ended December 31, 2011, relates to Houdini Inc. Houdini started business January 1, 2011, and uses the LIFO retail method to estimate ending inventory. Current period cost-to-retail percentage is:
A. 70%
Houdini estimated ending inventory at retail is
D. 129000
Houdini estimated ending inventory at cost
B. 83500
When computing the cost-to-retail percentage for the average cost retail method included in the denominator are
A. Net markups and net markdowns
The conventional retail inventory method is based on
C. Average, LCM
Cloverdale, Inc. uses the conventional retail inventory method to account for inventory. The following information relates to current year's operations: What amount should be reported as cost of goods sold for the year?
C. 275000
Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below: The conventional cost-to-retail percentage (rounded) is:
B. 66.7%
Willie Nelson To the nearest thousand, estimated ending inventory using the conventional retail method is:
D. 30000
Clarabell Inc. uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below: The conventional cost-to-retail percentage (rounded) is:
A. 54.9%
Clarabell Inc. To the nearest thousand, estimated ending inventory using the conventional retail method is:
C. 127000
Using the dollar-value LIFO retail method for inventory
B. Combines retail LIFO accounting with dollar-value LIFO accounting
To use the dollar-value LIFO retail method for inventory, the first step is to
C. Determine the cost-to-retail percentage for the current year transactions
To use the dollar-value LIFO retail method for inventory, the second step is to determine the estimated
D. Ending inventory at base year retail prices
To determine if an increase in the dollar value of inventory is due to increased quantities, using dollar-value LIFO retail
D. Deflate the ending inventory amount to beginning of year prices and compare to the beginning inventory amount
To determine the value of a LIFO layer, using dollar-value LIFO retail
C. Multiply the LIFO layer by the layer-year price index and by the layer-year cost-to-retail percentage
Portman Inc. uses the conventional retail inventory method. Expressed in millions of dollars, information about Portman's 2011 inventory account is expressed in the table below: At what amount would Portman record its inventory on its 12/31/11 balance sheet?
A. 150 million
Harlequin Co. has used the dollar-value LIFO retail method since it began operations in early 2010 (its base year). Its beginning inventory for 2011 was $36,000 at cost and $72,000 at retail prices. At the end of 2011, it computed its estimated ending inventory at retail to be $120,000. Assuming its cost-to-retail percentage for 2011 transactions was 60%, what is the inventory balance that Harlequin Co. would report in its 12/31/11 balance sheet?
D. It can't be determined with the given information
Retrospective treatment of prior years' financial statements is required when there is a change from
D. All of the above
Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the next year. As a result, Prunedale's cost of goods sold for this year was:
A. Overstated by 94000
Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,000, and its ending inventory on December 31 was understated by $17,000. In addition, a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase. None of these errors were discovered until the next year. As a result, Prunedale's cost of goods sold for this year was:
C. Understated by 31000
On July 10, 2011, Johnson Corporation signed a purchase commitment to purchase inventory for $200,000 on or before February 15, 2012. The company's fiscal year-end is December 31. The contract was exercised on February 1, 2012 and the inventory was purchased for cash at the contract price. On the purchase date of February 1, the market price of the inventory was $210,000. The market price of the inventory on December 31, 2011, was $180,000. The company uses a perpetual inventory system. How much loss on purchase commitment will Johnson recognize in 2011?
B. 20000
At what amount will Johnson record the inventory purchased on February 1, 2012?
C. 180000
Sullivan Corporation. has determined its year-end inventory on a FIFO basis to be $500,000. Information pertaining to that inventory is as follows:What should be the carrying value of Sullivan's inventory?
B. 440000
What should be the carrying value of Sullivan's inventory if the company prepares its financial statements according to International Financial Reporting Standards?
D. 490000
When applying the LCM rule to inventory valuation according to IFRS, market always is
B. NRV