FINANCE

11.  The Boxwood Company sells blankets for $ 34.00 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

 

Date           Product Z       Units            Cost

May 03         Purchase         8             $18.00

May 10         Sale               5

May 17         Purchase      11                $17.00

May 20           Sale           4

May 23           Sale           2

May 30          Purchase    8                  $22.00

 

Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.

 

$272.00

$352.00

$288.00

$312.00

 

12.  The following lots of a particular commodity were available for sale during the year:

 

Beginning inventory 8 units at $47.00

First purchase  16 units at $55.00

Second purchase  54 units at $59.00

Third purchase  19 units at $62.00

 

The firm uses the periodic system and there are 22 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the LIFO method?

 

$1,355.00

$5,620.00

$1,146.00

$1,034.00

 

13.  If the cost of an item of inventory is $53.00 and the current replacement cost is $65.00, what is the amount included in inventory according to the lower of cost or market?

 

$65.00

$53.00

$12.00

$118.00

 

14.  During the taking of its physical inventory on December 31, 2014, Barry’s Bike Shop incorrectly counted its inventory as $218,938.00 instead of the correct amount of $178,577.00. What would be the effect on the balance sheet and income statement?

 

assets overstated by $40,361.00 retained earnings understated by $40,361.00 net income statement understated by $40,361.00.

 

assets overstated by $218,938.00 retained earnings understated by $178,577.00 no effect on the income statement.

 

assets and retained earnings overstated by $40,361.00 net income overstated by $40,361.00.

 

assets and retained earnings overstated by $178,577.00 net income understated by $218,938.00.

 

15.  Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $44,741.00. During the year they purchased an inventory with a retail cost of $662,662.00. After performing a physical inventory, they calculated their inventory cost at retail to be $66,731.00. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

 

$320,336.00

$66,731.00

$33,365.50

$11,375.50

 

16.  A business using the retail method of inventory costing determines that merchandise inventory at retail is $511,100. If the ratio of cost to retail price is 50%, what is the amount of inventory to be reported on the financial statements?

 

17.  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 01Merchandise Inventory    $23,960        $39,930

May 01-31Purchases (net)         $45,860        $61,850

May 01-31Sales (net)                                   $96,960

 

 

$19,400

$16,094

$3,306

$27,140

 

18.  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. 01Merchandise inventory      $88,513.00

Sep. 01-30Purchases (net)           $175,962.00

Sep. 01-30Sales (net)                  $126,601.00

 

$52,788.60

$37,980.30

$88,620.70

$175,854.30

 

19.  The Boxwood Company sells blankets for $31.00 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

 

Date      Product Z       Units    Cost

May 03       Purchase     27    $18.00

May 10        Sale         11

May 17       Purchase    32      $20.00

May 20       Sale           14

May 23       Sale             8

May 30       Purchase    29      $21.00

 

Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

 

$92

$288

$160

$248

 

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