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1. 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:$11,000
Net sales for fourth quarter:$40,000
Net purchases for fourth quarter:$29,000
This company typically achieves a gross profit ratio of 10%. Ending Inventory under the gross profit method would be:
[pic]
|[pic] |$4,875. |
|[pic] |$4,200. |
|[pic] |$3,800. |
|[pic] |$4,000. |
|[pic] |$4,300. |
| | |
COGS = $40,000 x 90% = $36,000
Costs available for sale = $11,000+ $29,000 = $40,000
EI = $40,000 - $36,000 = $4,000
2. A company has inventory of 14 units at a cost of $13 each on June 1. On June 3, it purchased 28 units at $12 each. 19 units are sold on June 5. Using the FIFO perpetual inventory method, what is the cost of the 19 units that were sold?
[pic]
|[pic] |$228. |
|[pic] |$336. |
|[pic] |$242. |
|[pic] |$60. |
| |$247. |
| | |
| |(14 × $13) + (5 × $12) = $242 |
| | |
3. A company had inventory of 18 units at a cost of $22 each on November 1. On November 2, it purchased 11 units at $20 each. On November 6 it purchased 5 units at $21 each. On November 8, it sold 31 units for $56 each. Using the LIFO perpetual inventory method, what was the cost of the 31 units sold?
[pic]
|[pic] |$1,736. |
|[pic] |$396. |
|[pic] |$655. |
|[pic] |$105. |
|[pic] |$220. |
= (5 × $21) + (11 × $20) + (15 × $22) = $655
4. A company has inventory of 8 units at a cost of $9 each on June 1. On June 3, it purchased 18 units at $13 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold?
[pic]
|[pic] |$306. |
|[pic] |$124. |
|[pic] |$152. |
|[pic] |$162. |
|[pic] |$468. |
= (8 × $9) + (4 × $13) = $124
5. A company has the following per unit original costs and replacement costs for its inventory:
Part A: 70 units with a cost of $7, and replacement cost of $1
Part B: 80 units with a cost of $4, and replacement cost of $8
Part C: 125 units with a cost of $6, and replacement cost of $2
Under the lower of cost or market method, the total value of this company's ending inventory is:
[pic]
|[pic] |$640.00. |
|[pic] |$1,560.00. |
|[pic] |$960.00. |
|[pic] |$1,560.00 or $640.00, depending upon whether LCM is applied to individual items or to the inventory as a whole. |
|[pic] |$960.00 or $640.00, depending upon whether LCM is applied to individual items or the inventory as a whole. |
6. A company normally sells its product for $20 per unit. However, the selling price has fallen to $14 per unit. This company's current inventory consists of 200 units purchased at $17 per unit. Replacement cost has now fallen to $5 per unit. Calculate the value of this company's inventory at the lower of cost or market.
[pic]
|[pic] |$4,000. |
|[pic] |$3,400. |
|[pic] |$1,000. |
|[pic] |$2,800. |
|[pic] |$1,750. |
| | |
200 units @ $5 per unit = $1,000
7. 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: $3,500
Net sales: $34,000
Net purchases: $41,500
The company's gross margin ratio is 10%. Using the gross profit method, the cost of goods sold would be:
[pic]
|[pic] |$30,600. |
|[pic] |$37,500. |
|[pic] |$31,475. |
|[pic] |$30,500. |
|[pic] |$3,400. |
90% x $34,000 = $30,600
8. Toys "T" Us had cost of goods sold of $10,100 million, ending inventory of $2,700 million, and average inventory of $2,000 million. Its inventory turnover equals(rounded):
[pic]
|[pic] |37.4 days. |
|[pic] |.20. |
|[pic] |5.05. |
|[pic] |50.5 days. |
|[pic] |3.74. |
| | |
| | |
| | |
= $10,100 / $2,000 = 5.05
9. A company normally sells its product for $18 per unit. However, the selling price has fallen to $14 per unit. This company's current inventory consists of 400 units purchased at $14 per unit. Replacement cost has now fallen to $7 per unit. Calculate the value of this company's inventory at the lower of cost or market.
[pic]
|[pic] |$7,200. |
|[pic] |$2,800. |
|[pic] |$3,550. |
|[pic] |$5,600. |
|[pic] |$5,600. |
= 400 × $7 = $2,800
10. 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:$14,000
Net sales for fourth quarter:$43,500
Net purchases for fourth quarter:$29,500
This company typically achieves a gross profit ratio of 5%. Ending Inventory under the gross profit method would be:
[pic]
|[pic] |$1,975. |
|[pic] |$2,375. |
|[pic] |$2,475. |
|[pic] |$2,175. |
|[pic] |$3,050. |
COGS = $43,500 x 95% = $41,325
Costs available for sale = $14,000 + $29,500 = $43,500
EI = $43,500 - $41,325 = $2,175
11. A company reported the following information regarding its inventory.
Beginning inventory: cost is $70,000 retail is $90,000
Net purchases: cost is $75,000 retail is $145,000
Sales at retail: $170,000
The year-end inventory showed $65,000 worth of merchandise available at retail prices. What is the cost of the ending inventory? Round your cost-to-retail ratio to a whole percentage number.
[pic]
|[pic] |$40,481. |
|[pic] |$41,431. |
|[pic] |$40,656. |
|[pic] |$40,106. |
|[pic] |$40,931. |
12. A company has inventory of 14 units at a cost of $11 each on August 1. On August 5, it purchased 5 units at $15 per unit. On August 12 they purchased 16 units at $17 per unit. On August 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at August 15 after the sale?
[pic]
|[pic] |$85. |
|[pic] |$272. |
|[pic] |$323. |
|[pic] |$595. |
|[pic] |$111. |
Units available for sale = 14 + 5 + 16 = 35 units
Units in inventory = 35 - 30 = 5 units
Cost of inventory = 5 x $17 each = $85
13. The Jackson Company has sales of $310,000 and cost of goods available for sale of $279,000. If the gross profit ratio is typically 25%, the estimated cost of the ending inventory under the gross profit method would be:
[pic]
|[pic] |$69,750 |
|[pic] |Impossible to determine from the information provided. |
|[pic] |$93,000 |
|[pic] |$23,250 |
|[pic] |$46,500 |
14. Maria-Jones Corporation uses a weighted-average perpetual inventory system.
August 2, 9 units were purchased at $11 per unit.
August 18, 15 were purchased at $14 per unit.
August 29, 12 units were sold.
What was the amount of the cost of goods sold for this sale? Round your final answer to the nearest whole dollar. Round your cost per unit to 2 decimal places.
[pic]
|[pic] |$309. |
|[pic] |$142. |
|[pic] |$168. |
|[pic] |$155. |
|[pic] |$230. |
Average cost = [(9 x $11) + (15 x $14)]/24 units = $12.875/unit
Cost of sale = 12 units x $12.875/unit = $154.5
15. Toys "T" Us had cost of goods sold of $10,940 million, ending inventory of $3,300 million, and average inventory of $1,400 million. Its inventory turnover equals(rounded):
[pic]
|[pic] |3.32. |
|[pic] |78.1 days. |
|[pic] |7.81. |
|[pic] |.13. |
|[pic] |33.2 days. |
16. Toys "G" Us had cost of goods sold of $11,800 million, ending inventory of $2,750 million, and average inventory turnover of $2,350 million. Its days' sales in inventory equals(rounded):
[pic]
|[pic] |85 days. |
|[pic] |73 days. |
|[pic] |87 days. |
|[pic] |4 days. |
|[pic] |5 days. |
17. A company had inventory of 8 units at a cost of $20 each on November 1. On November, they purchased 8 units at $19 each. On November 6 they purchased 5 units at $25 each. On November 8, they sold 18 units for $52 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?
[pic]
|[pic] |$277. |
|[pic] |$312. |
|[pic] |$402. |
|[pic] |$285. |
|[pic] |$377. |
18. A company has inventory of 16 units at a cost of $9 each on October 1. On October 5, they purchased 12 units at $13 per unit. On October 12 they purchased 21 units at $17 per unit. On October 15, they sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at October 15 after the sale?
[pic]
|[pic] |$323. |
|[pic] |$144. |
|[pic] |$398. |
|[pic] |$36. |
|[pic] |$357. |
19. A company has inventory of 7 units at a cost of $9 each on June 1. On June 3, it purchased 17 units at $11 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold?
[pic]
|[pic] |$153. |
|[pic] |$495. |
|[pic] |$118. |
|[pic] |$250. |
|[pic] |$146. |
20. A company that has operated with a 15% average gross profit ratio for a number of years had $80,000 in sales during the first quarter of this year. If it began the quarter with $36,000 of inventory at cost and purchased $75,000 of inventory during the quarter, its estimated ending inventory by the gross profit method is:
[pic]
|[pic] |$41,000. |
|[pic] |$43,200. |
|[pic] |$12,000. |
|[pic] |$43,000. |
|[pic] |$111,000. |
21. A company had the following purchases during the current year:
| January: | 10 units at $130 |
| February: | 16 units at $130 |
| June: | 12 units at $130 |
| October: | 16 units at $115 |
| November: | 14 units at $170 |
On December 31, there were 27 units remaining in ending inventory. These 27 units consisted of 3 from January, 5 from February, 3 from June, 8 from October, and 8 from November. Using the specific identification method, what is the cost of the ending inventory?
[pic]
|[pic] |$1,435. |
|[pic] |$3,710. |
|[pic] |$4,940. |
|[pic] |$4,590. |
|[pic] |$3,560 |
(3 × $130) + (5 × $130) + (3 × $130) + (8 × $115) + (8 × $170) = 3,710
22. A company had inventory on November 1 of 2 units at a cost of $19 each. On November 2, they purchased 7 units at $21 each. On November 6 they purchased 4 units at $24 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
[pic]
|[pic] |$113 |
|[pic] |$131 |
|[pic] |$101 |
|[pic] |$139 |
|[pic] |$244 |
23. Alfred-David Corporation uses a weighted-average perpetual inventory system.
August 2, 8 units were purchased at $12 per unit.
August 18, 12 were purchased at $15 per unit.
August 29, 13 units were sold.
What was the amount of the cost of goods sold for this sale? Round your final answer to the nearest whole dollar. Round your cost per unit to 2 decimal places.
[pic]
|[pic] |$276. |
|[pic] |$166. |
|[pic] |$179. |
|[pic] |$254. |
|[pic] |$195. |
24. A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged:
1. Inventory, beginning: $28,550
2. Purchases for the period: $12,000
3. Sales for the period: $53,000
4. Sales returns for the period: $500
The company's average gross profit ratio is 40%. What is the estimated cost of the lost inventory?
[pic]
|[pic] |$21,000. |
|[pic] |$9,325. |
|[pic] |$41,000. |
|[pic] |$10,300. |
|[pic] |$9,050. |
25. Acme-Jones Company uses a weighted-average perpetual inventory system.
August 2: 8 units were purchased at $10 per unit.
August 18: 14 units were purchased at $13 per unit.
August 29: 16 units were sold.
August 31: 14 units were purchased at $16 per unit.
What is the per-unit value of ending inventory on August 31? (Round the unit calculations to two decimal places and total cost calculations to the whole dollar.)
[pic]
|[pic] |$17.17. |
|[pic] |$190.88. |
|[pic] |$13.50. |
|[pic] |$14.75. |
|[pic] |$5.68. |
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