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Chapter 6 Test
Chapter 6 Test
Chapter 6 Test
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:
$4,875.
$4,200.
$3,800.
$4,000.
$4,300.
5. A company has the following per unit original costs and replacement costs for its
inventory:
Under the lower of cost or market method, the total value of this company's ending
inventory is:
$640.00.
$1,560.00.
$960.00.
$1,560.00 or $640.00, depending upon whether LCM is applied to individual
items or to the inventory as a whole.
$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.
$4,000.
$3,400.
$1,000.
$2,800.
$1,750.
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):
37.4 days.
.20.
5.05.
50.5 days.
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.
$7,200.
$2,800.
$3,550.
$5,600.
$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:
$1,975.
$2,375.
$2,475.
$2,175.
$3,050.
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?
$85.
$272.
$323.
$595.
$111.
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:
$69,750
Impossible to determine from the information provided.
$93,000
$23,250
$46,500
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):
3.32.
78.1 days.
7.81.
.13.
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):
85 days.
73 days.
87 days.
4 days.
5 days.
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?
$1,435.
$3,710.
$4,940.
$4,590.
$3,560
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?
$21,000.
$9,325.
$41,000.
$10,300.
$9,050.
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.)
$17.17.
$190.88.
$13.50.
$14.75.
$5.68.