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CHAPTER 8: INVENTORIES: SPECIAL VALUATION ISSUES
1. Reporting inventory at the lower of cost or market provides a representationally faithful value of inventory; therefore,
the application of the lower of cost or market rule is consistent with the materiality principle.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ACCT.WHAL.16.8.1 - LO: 8.2
NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic
LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling
KEYWORDS: Bloom’s: Remembering
2. The Net Realizable Value is considered the ceiling that prevents inventory from being valued at amount higher than
what the company could reasonably sell it.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
3. The lower-of-cost-or-market rule must be applied to each individual inventory item but not to groups of items
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8: Inventories: Special Valuation Issues
4. If a company recognizes a loss due to inventory write-down then the inventory value subsequently increases due to a
market reversal the following year, GAAP does not permit the loss to be recovered.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - BUSPROG: Analytic
LOCAL STANDARDS: United States - Ohio - Default City - AICPA - FN-Decision Modeling
KEYWORDS: Bloom's: Remembering
5. Precious metals can be valued above costs because they are immediately marketable at a quoted market price.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
6. An auditor may not use the gross profit method to verify the accuracy of the reported cost of inventory.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
7. The gross profit method is an appropriate method for determining the cost of inventory for interim financial statements.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
8. An advantage of the retail inventory method over the gross profit is the retail method uses current-period estimates
whereas the gross profit used past periods.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
9. The gross profit method is more sensitive to price changes than the FIFO method and produces a more accurate
estimate of current period ending inventory.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
10. The purpose of dollar-value LIFO retail method is to eliminate the effects of price changes during a period.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
11. Under the dollar-value LIFO the cost-to-retail ratio includes net markups and net markdowns from both the current
period and beginning inventory. during the current period.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
12. If a purchase on credit is omitted from the purchase account in error and ending inventory is correctly determined, net
income for the period would be understated.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
KEYWORDS: Bloom’s: Understanding
13. If ending inventory is overstated for the current period due to a costing error but purchases are correct, the balance
sheet at the end of the succeeding year would be correctly stated.
a. True
b. False
ANSWER: True
POINTS: 1
14. A company using the periodic inventory system to record the reduction of inventory to market value would record the
following journal entry to close beginning inventory using the direct method:
Allowance to Reduce Inventory to Market x,xxx

Inventory x,xxx
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
15. A company using the periodic inventory system to record the reduction of inventory to market would record the
following journal entry to record inventory at market using the allowance method:
Loss due to Market Valuation x,xxx

Allowance to Reduce Inventory to Market x,xxx
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
16. The most common approach to implementing the lower of cost or market rule for inventory valuation is to apply it to
a. each individual item of inventory separately.
b. each major category of inventory.
c. the total inventory in the aggregate.
d. inventory items that have increased in value but not to items that have decreased in value.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
17. Which application of the lower of cost or market rule will generally result in the lowest valuation for the ending
inventory?
a. to each item of the inventory
b. to each major category of inventory
c. to the total inventory in the aggregate
d. To high-cost items but not to low-cost items
ANSWER: a
POINTS: 1
18. When applying lower of cost or market, market value

a. is defined as the selling price.
b. should not exceed the net realizable value.
c. should not exceed the net realizable value less an allowance for a normal profit margin.
d. should not exceed the net realizable value plus an allowance for a normal profit margin.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
19. When applying lower of cost or market, market value should not be less than
a. replacement value.
b. net realizable value.
c. net realizable value less an allowance for a normal profit margin.
d. replacement value less an allowance for a normal profit margin.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - BUSPROG: Analytic
LOCAL STANDARDS: United States - Ohio - Default City - AICPA - FN-Decision Modeling
KEYWORDS: Bloom's: Remembering
Exhibit 8-1
Rival Inc. uses the lower of cost or market rule in valuing its inventory. One unit has a ceiling constraint of $45.50. The
following is other information concerning this unit:
Estimated transportation costs for delivery $3.90

Normal profit margin 7.50
Packaging costs prior to delivery 3.40
20. Refer to Exhibit 8-1. The selling price of this unit must be
a. $49.30
b. $53.00
c. $52.80
d. $49.10
ANSWER: c
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Measurement
KEYWORDS: Bloom’s: Analyzing
21. Refer to Exhibit 8-1. The floor constraint of this unit must be
a. $41.90
b. $38.00
c. $41.70
d. $38.10
ANSWER: b
POINTS: 1
22. When comparing the lower of cost to market

a. the appropriate market value is determined before comparing it to the cost.
b. the purpose of the ceiling is to ensure that the write-down is sufficient to cover all expected gains.
c. the purpose of the floor is to prevent an excessive gain from being recognized in the future.
d. the process is consistent with the principle of conservatism because the goal is to limit excessive swings in
gross margin.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
23. Morris Company uses the lower of cost or market rule in valuing its inventory. The floor constraint for one item in the
inventory is $68.20. The following is other information concerning this unit:
Transportation costs $ 4.00

Packaging costs 4.20
The net realizable value for this item is

a. $72.40
b. $55.50
c. $80.90
d. $76.40
ANSWER: c
POINTS: 1
24. When applying the lower of cost or market rule to the valuation of inventory, the allowance method is considered
preferable to the direct method because
a. the allowance method reports smaller losses than the direct method.
b. the allowance method reports a higher inventory net valuation for balance sheet purposes than the direct
method.
c. the allowance method reports the inventory loss or loss recovery in a separate income statement account.
d. the allowance method, unlike the direct method, reduces the value of inventory reported on the balance sheet.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
25. In comparison to the allowance method of applying the lower of cost or market rule to the valuation of inventory, the
direct method has which of the following deficiencies?
a. The direct method reports a more conservative amount for net income.
b. For the direct method, the loss or loss recovery due to market valuation changes is included in the cost of
goods sold amount.
c. The direct method makes changes to the historical cost of inventory reported on the balance sheet.
d. The direct method can only be used with a perpetual inventory system.
ANSWER: b
POINTS: 1
26. Given the following information for the Raquel Company:
Date Cost Market

December 31, 2016 $500 $500
December 31, 2017 700 700
December 31, 2018 800 730
Under the periodic system, if the direct method of recording lower of cost or market is in use, which December 31,
2018 entry is correct?
a. Inventory 70
Cost of Goods Sold 70
b. Cost of Goods Sold 70
Inventory 70
c. Loss Due to Market Valuation 70
Allowance to Reduce Inventory to Market 70
d. Cost of Goods Sold 70
ANSWER: b
POINTS: 1
27. Given the following information for the Tea Company:
Date Cost Market
December 31, 2016 $ 800 $ 800
December 31, 2017 1,000 1,000
December 31, 2018 1,200 1,060
Under the periodic system, if the allowance method of recording lower of cost or market is in use, which December
31, 2018entry is correct?
a. Loss Due to Market Valuation 140
b. Allowance to Reduce Inventory to Market 140
Loss Recovery Due to Market Valuation 140
c. Inventory 140
Cost of Goods Sold 140
d. Cost of Goods Sold 140
Inventory 140
ANSWER: a
POINTS: 1
28. Zoe Company has provided the following values for its 400 units of inventory at the end of 2014:
Item Per Unit

Historical cost $65.00
Replacement cost $54.20
Net realizable value $54.50
Normal profit margin $ 13.80
Under IFRS requirements, the per-unit reported value for Zoe's inventory will be
a. $65.00
b. $54.50
c. $54.20
d. $40.70
ANSWER: b
POINTS: 1
29. The Maxa Company normally sells its inventory at a 20% profit margin on sales. In 2016, the net realizable value of
inventory purchased for $75,000 declined to $66,000. There are no costs to complete and dispose of this inventory.
What is the floor constraint on the valuation of this inventory using the lower of cost or market rule?
a. $60,000
b. $66,000
c. $79,200
d. $52,800
ANSWER: d
POINTS: 1
30. Which one of the following statements is true with regard to the lower of cost or market rule?
a. If the direct method is used in applying the lower of cost or market rule, the loss or loss recovery due to
market valuation changes is included in cost of goods sold.
b. The lower of cost or market rule must be applied on an individual item basis for financial accounting purposes.
c. With the application of the lower of cost or market rule using the direct method, the account, Allowance to
Reduce Inventory to Market, is reported on the balance sheet as a contra asset.
d. The lower of cost or market rule is primarily an application of the going concern assumption.
ANSWER: a
POINTS: 1
31. Although IFRS require the use of the lower of cost or market method to value inventory, some differences from
GAAP still exist. Which of the following is not one of the differences?
a. IFRS eliminate the need to use a ceiling in determining market value.
b. When write-downs occur, IFRS do not specify how the loss must be categorized in the income statement.
c. IFRS allow the reversal of a previous write-down.
d. IFRS define market only as replacement value.
ANSWER: d
POINTS: 1
32. The major criticism of the lower of cost or market rule for valuation of inventory is that.
a. holding losses are recognized, but holding gains are not.
b. holding gains are recognized, but holding losses are not.
c. the total difference between selling price and cost is usually recognized in the period of the sale.
d. the conservatism principle is violated because of the use of the floor constraint.
ANSWER: a
POINTS: 1
33. Concerning application of the lower of cost or market method, which one of the following statements is true regarding
the constraints on market value?
a. The upper constraint is estimated selling price less costs of completion and disposal.
b. The lower constraint is net realizable value less costs of completion and disposal.
c. The lower constraint is estimated selling price less a normal profit margin.
d. The upper constraint is estimated selling price less costs of completion and disposal and a normal profit
margin.
ANSWER: a
POINTS: 1
34. Major Company uses the lower of cost or market rule in valuing its inventory. The floor constraint for one item in the
inventory is $58.20. The following is other information concerning this unit:
Transportation costs $ 5.00

Packaging costs 5.20
The market value for this item is

a. $58.20
b. $70.90
c. $75.90
d. $81.10
ANSWER: d
POINTS: 1
35. In general, it is argued that the lower of cost or market rule is supported most closely by which of the following
theoretical assumptions?
a. revenue recognition
b. Representational faithfulness
c. historical cost
d. going concern
ANSWER: b
POINTS: 1
36. Assume that there is a decline in inventory value in one period, then there is a reversal of value to the original or
higher value and a later period. Which of the following statements about recognition of the loss is true?
a. The decline in inventory value and related loss should be recognized in the first period and reversed in the
second period in all situations.
b. The decline in inventory value and related loss should be recognized in the first period and reversed in the
second period but only if the second period is within the same fiscal year.
c. The decline in inventory value and related loss should be recognized in the first period and reversed in the
second period but only if the second period is within a different fiscal year.
d. The decline in inventory value and related loss should never be recognized.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
37. Which of the following is not a justification for valuing inventory above historical cost?
a. Floor value above both market price and historical cost
b. Interchangeability of the units of inventory
c. each item, the total of inventory, or major categories of inventory
d. Inability to determine appropriate prices
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
38. Which one of the following inventories may not be valued for balance sheet purposes at the inventory's selling price
less distribution costs even if it is above the cost of the inventory?
a. grain for an agricultural company
b. crude oil for an oil company
c. gold for a mining corporation
d. laptops for a computer manufacturer
ANSWER: d
POINTS: 1
39. Generally, valuing inventory above cost

a. violates conservatism and is never allowed.
b. violates the lower of cost or market rule and is never allowed.
c. is acceptable when revenue recognition is not applicable.
d. is acceptable only in selected industries and in certain circumstances.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
40. Which one of the following inventories may be valued for balance sheet purposes at the inventory's selling price less
distribution costs even if it is above the cost of the inventory?
a. automobiles for an automobile manufacturer
b. gold for a mining corporation
c. steel for a steel manufacturer
d. athletic shoes for a retail store
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
41. For the period from 2016 through 2016, the Charlie Company had net sales of $500,000 and a gross profit of
$200,000. During the first quarter of 2018, the company made purchases of $19,500 and recorded sales of $47,500.
The inventory value at the beginning of the year was 15,500. What is the estimated cost of Charlie’s inventory on
March 31, 2018, using the gross profit method?
a. $22,500
b. $15,000
c. $6,500
d. $6,000
ANSWER: c
POINTS: 1
Exhibit 8-2
The Dormer Company uses the gross profit method to estimate its inventory in interim financial statements. The markup
on cost is 50%. The following information is available:
January 1, 2016, inventory balance $12,500

Purchases 25,000
Sales during January 24,000
42. Refer to Exhibit 8-2. The estimated inventory at January 31, 2016, is
a. $25,500
b. $21,500
c. $16,000
d. $12,000
ANSWER: b
POINTS: 1
43. Refer to Exhibit 8-2. The estimated cost of goods sold at January 31, 2016, is
a. $25,500
b. $21,500
c. $16,000
d. $12,000
ANSWER: c
POINTS: 1
44. Consider the following:
Code: A = Gross profit to net sales ratio

B = Gross profit to cost of goods sold ratio
Which equation is correct?

a. A = B / (1 − B)
b. A = (1 + B) / B
c. A = (1 − B) / B
d. A = B / (1 + B)
ANSWER: d
POINTS: 1
45. Relevance of the gross profit margin depends upon
a. the accuracy of the gross profit percentage
b. the net sales
c. applying the overall profit margin to each individual department
d. averaging prior periods' net sales and total sales to verify which is best to use
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
46. Which one of the following statements is not true with regard to the gross profit method of estimating inventories?
a. The gross profit method may be used to determine inventory for interim financial reporting purposes without
taking a physical count.
b. The percentage used for the gross profit method is determined by using previous years' historical data.
c. The gross profit method is not as accurate as the retail inventory method.
d. The gross profit method may only be used with a perpetual inventory accounting system.
ANSWER: d
POINTS: 1
47. The Sahara Company's inventory was partially destroyed on June 4, 2016, when its warehouse caught on fire early in
the morning. Inventory that had a cost of $8,000 was saved. The accounting records, which were located in a fireproof
vault, contained the following information:
Sales (1/1/16 through 6/3/16) $260,000

Purchases (1/1/16 through 7/3/16) 190,000
Inventory (1/1/16) 40,000
Gross profit ratio 30% of cost
Using the gross profit method, what is the estimated cost of the inventory destroyed by the fire?
a. $130,,000
b. $48,000
c. $39,000
d. $30,000
ANSWER: d
POINTS: 1
48. Given the following information for Bonnie Bunny Company:
Freight-in $ 650
Purchases 12,550
Sales returns 350
Beginning inventory 1,950
Sales 23,450
Gross profit on sales 45%
Calculate ending inventory of Bonnie Bunny using the gross profit method.
a. $4,755
b. $4,373
c. $2,445
d. $2,060
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
49. As a result of taking a physical inventory count on December 31, 20106 the Cookie Company inventory was
determined to be $425,000. The auditors for Cookie suspected an inventory shortage and used the gross profit method
to estimate the ending inventory. The accounting records for the company contained the following information:
Inventory (1/1/16) $ 330,000

Purchases (2016) 1,770,000
Sales (2016) 2,200,000
Sales returns (2016) 100,000
Gross profit ratio 25% of sales
Using the gross profit method, what did the auditors estimate as the amount of the inventory shortage at December 31,
2016?
a. $100,000
b. $75,000
c. $15,000
d. $0
ANSWER: a
POINTS: 1
50. The gross profit method is not used to

a. replace the year-end physical inventory.
b. check the cost generated by a perpetual inventory system.
c. determine the cost of inventory destroyed by fire.
d. develop a sales budget.
ANSWER: a
POINTS: 1
51. The Jamison Company's inventory was destroyed on July 4, 2016, when its warehouse caught on fire early in the
morning. Inventory was totally destroyed. The accounting records, which were located in a fireproof vault, contained
the following information:
Sales (1/1/16 through 7/3/16) $240,000

Purchases (1/1/16 through 7/3/16) 180,000
Inventory (1/1/16) 45,000
Gross profit ratio 25% of cost
Using the gross profit method, what is the estimated cost of the inventory that was destroyed by the fire?
a. $15,000
b. $23,250
c. $33,000
d. $45,000
ANSWER: d
POINTS: 1
52. As a result of taking a physical inventory count on December 31, 2016, the Mona Lisa Company inventory was
determined to be $61,500. The auditors for Mona Lisa suspected an inventory shortage and used the gross profit
method to estimate the ending inventory. The accounting records for the company contained the following
information:
Inventory (1/1/16) $ 130,000

Purchases (2016) 760,000
Sales (2016) 1,020,000
Sales returns (2016) 60,000
Gross profit ratio 25% of sales
Using the gross profit method, what did the auditors estimate as the amount of the inventory that should have been on
hand at December 31, 2016?
a. $240,000
b. $170,000
c. $125,000
d. $ 61,500
ANSWER: b
POINTS: 1
53. Which one of the following statements regarding the gross profit method is not true?
a. The gross profit method is not a practical method to use in real-world situations.
b. The gross profit method is often used to estimate the year-end inventory for comparison to actual on-hand
inventory.
c. The gross profit method is an acceptable method to estimate the cost of inventory destroyed by a casualty.
d. The gross profit method results in a less accurate inventory valuation than the retail inventory method.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
54. Which one of the following statements regarding the gross profit method is true?
a. The gross profit method is a complicated method to use in practice.
b. The gross profit method results in a more accurate inventory valuation than the retail inventory method.
c. The gross profit method is an acceptable method to estimate the cost of inventory destroyed by a casualty.
d. The gross profit method is often used to calculate the year-end inventory for financial accounting purposes.
ANSWER: c
POINTS: 1
55. At the beginning of 2016, the Joan Company had an inventory valued at $34,375 at cost ($50,000 at retail). During the
year, Joan purchased inventory for $50,000 ($70,000 at retail), and made markdowns of $7,500. Joan’s sales in 2016
were $62,500. What is Joan’s estimated ending inventory at FIFO cost using the retail inventory method?
a. $37,500
b. $40,000
c. $39,000
d. $34,375
ANSWER: b
POINTS: 1
56. With the retail inventory method, how is the total beginning inventory value used in the calculation of the cost-to-
retail ratio for the current period under the following cost flow assumptions?
FIFO Average Cost LIFO

I. Include Include Exclude
II. Include Exclude Exclude
III. Exclude Exclude Exclude
IV. Exclude Include Exclude
a. I
b. II
c. III
d. IV
ANSWER: d
POINTS: 1
57. If the net markdowns are excluded from the calculation of the cost-to-retail ratio in the retail inventory method, what
is the effect on the cost-to-retail ratio?
a. The denominator of the ratio will be lower, which results in a higher cost-to-retail ratio.
b. The denominator of the ratio will be higher, which results in a lower cost-to-retail ratio.
c. The numerator of the ratio will be higher, which results in a higher cost-to-retail ratio.
d. The numerator of the ratio will be lower, which results in a lower cost-to-retail ratio.
ANSWER: b
POINTS: 1
58. The Alpha Company uses the retail inventory method for valuation of its inventory. If an item had a cost of $45, was
originally marked to sell at $60, was later priced at $55, and finally was priced at $68, the resulting price change is a
a. net markup of $13.
b. net markdown of $5 and a markup of $8.
c. net markdown of zero and an a markup of $8.
d. net markup of $23.
ANSWER: c
POINTS: 1
59. The Alexandra Company uses the retail inventory method and the average cost flow assumption for preparation of its
interim reports. Information about Alexandra’s inventory in the second quarter of 2016 is shown below:
Cost Retail
Beginning inventory $255 $ 800
Purchases 600 1,400
Net markups 200
Net markdowns (500)
Sales 1,300
What is the estimated cost of Alexandra’s inventory on June 30, 2016?

a. $270
b. $300
c. $585
d. $600
ANSWER: a
POINTS: 1
60. The Rebecca Company provided the following data for its December 31, 2016, inventory maintained on the retail
basis.
At Cost At Retail
Beginning inventory $165,000 $225,000
Purchases 275,000 446,000
Markups (net) 45,750
Markdowns (net) (32,000)
Sales 575,000
What is the estimated inventory at December 31, 2016, valued at lower of average cost or market?
a. $87,018
b. $70,522
c. $62,951
d. $44,069
ANSWER: a
POINTS: 1
61. When using the cost-to-retail ratio for the retail inventory method,
a. neither net markups nor markdowns are included in the computation of ending inventory for FIFO inventory.
b. net markups but not net markdowns are included in the computation of ending inventory for LIFO inventory.
c. net markups but not net markdowns are included in the computation of ending inventory for lower-of-cost-or-
market inventory.
d. net markdowns but not net markups are included in the computation of ending inventory for Average Cost
inventory.
ANSWER: c
POINTS: 1
62. Barbara Co. presents the following information:
Cost Retail
Net markups $ 785
Sales 2,850
Purchases $1,570 2,150
Net markdowns 50
Beginning inventory 300 350
The company uses the average cost retail inventory method. What is the cost of ending inventory?
a. $233.55
b. $255.98
c. $275.80
d. $222.55
ANSWER: d
POINTS: 1
63. Which one of the following statements is false concerning the retail inventory method?
a. Net markups and markdowns are always added and subtracted in order to compute the retail value of ending
inventory.
b. Markups and markdowns are recorded only at retail.
c. In the lower of average cost or market method, net markups are excluded from the computation of the cost-to-
retail ratio.
d. In computing the cost-to-retail ratio, purchase discounts affect only the cost of purchases and not the retail
amount of purchases.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
64. Which one of the following statements is false concerning the retail inventory method?
a. In arriving at a cost-to-retail ratio, sales discounts are deducted from goods available for sale to determine
ending inventory at retail.
b. Employee discounts are subtracted from goods available for sale to compute ending inventory at retail.
c. Abnormal inventory spoilage would be subtracted at both cost and retail in the determination of goods
available for sale.
d. Purchase returns and allowances must be subtracted from both the cost and retail value of the purchases.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
65. Eloise Corp. uses the FIFO retail inventory method and reports the following information:
Cost Retail
Purchases $21,450 $28,000
Sales 24,800
Net markups 1,000
Beginning inventory 2,100 3,000
Net markdowns 400
What is the FIFO value of ending inventory for Eloise Corp.?

a. $5,004
b. $5,053
c. $5,068
d. $5,100
ANSWER: d
POINTS: 1
66. Audrey Company uses the LIFO retail inventory method and reports the following information:
Cost Retail
Beginning inventory $ 540 $ 900
Net markups 1,000
Sales 4,500
Net markdowns 500
Purchases 3,150 4,000
What is the cost of ending inventory for Audrey Company?

a. $540
b. $562
c. $615
d. $630
ANSWER: a
POINTS: 1
67. Leslie, Ltd. used the LIFO retail inventory method to determine its ending inventory. The accounting records for the
company contained the following relevant information:
Cost Retail
Net purchases $48,000 $79,000
Sales 91,000
Net markups 5,000
Net markdowns 4,000
What is the LIFO cost of the ending inventory?

a. $6,720
b. $7,706
c. $8,000
d. $8,400
ANSWER: a
POINTS: 1
68. Darla’s Card Shop uses the average cost retail inventory method to determine the ending inventory. Darla's accounting
records for the current year contained the following information:
Cost Retail
Purchases $216,000 $317,500
Sales 350,000
Net markups 12,000
Net markdowns 8,000
In addition, sales returns for the year were $28,000, and employee discounts taken were $6,000. What is the cost of
the ending inventory
a. $35,000
b. $50,400
c. $54,600
d. $58,800
ANSWER: b
POINTS: 1
69. Stacie’s Shoes uses the FIFO retail inventory method to determine its ending inventory. The accounting records for
Stacie’s Shoes contained the following information:
Cost Retail
Purchases $242,000 $348,830
Sales 394,000
Sales returns 5,076
Net markups 32,800
Net markdowns 12,000
The freight-in charges for the merchandise were $7,500. What is the cost of ending inventory for Stacie’s Shoes?
a. $55,792
b. $57,200
c. $59,400
d. $61,281
ANSWER: d
POINTS: 1
70. Debbie’s Bling Shop uses the lower of average cost or market retail inventory method to determine its ending
inventory. The accounting records for the current year for Debbie’s contained the following information:
Cost Retail
Beginning inventory $19,000 $ 27,500
Purchases 71,500 94,000
Sales 105,000
Net markups 5,167
Net markdowns 3,067
In addition, the accounting records for Debbie’s disclosed that freight-in charges were $6,700 and sales returns were
$2,833. What is the cost-to-retail percentage to be used for ending inventory calculations?
a. 71.4%
b. 73.2%
c. 76.7%
d. 78.6%
ANSWER: c
POINTS: 1
71. Laura’s Department Store uses the average cost retail inventory method to determine its ending inventory. The
accounting records for the current year for Laura’s contained the following information:
Cost Retail
Purchases $71,200 $87,750
Sales 98,000
Net markups 6,500
Net markdowns 3,000
In addition, the accounting records for Laura’s disclosed that purchases returns at cost and retail were $1,950 and
$4,250, respectively. What is the cost-to-retail percentage to be used for ending inventory calculations?
a. 75.1%
b. 79.8%
c. 76.8%
d. 78.1%
ANSWER: d
POINTS: 1
72. Caroline’s Music Store uses the average cost retail inventory method to determine its ending inventory. The
accounting records for the current year for Caroline’s contained the following information:
Cost Retail
Purchases $108,000 $137,750
Sales 156,900
Net markups 21,500
Net markdowns 7,500
Employee discounts 14,500
What is the cost-to-retail percentage to be used for ending inventory calculations?

a. 70.0%
b. 73.2%
c. 79.4%
d. 77.8%
ANSWER: b
POINTS: 1
73. The Sherri’s Retail Shop uses the FIFO retail inventory method to determine its ending inventory. The accounting
records for the current year for Sherri’s contained the following information:
Cost Retail
Purchases $225,000 $362,250
Sales 385,750
Net markups 32,500
Net markdowns 19,750
Employee discounts 12,500
What is the cost-to-retail percentage to be used for ending inventory calculations?

a. 59.9%
b. 60.0%
c. 62.1%
d. 62.5%
ANSWER: b
POINTS: 1
74. Which of the following variations of the retail inventory method would generally result in the lowest cost-to-retail
ratio in a period of declining prices?
a. FIFO
b. LIFO
c. average cost
d. lower of average cost or market
ANSWER: a
POINTS: 1
75. Which of the following variations of the retail inventory method would generally result in the lowest cost-to-retail
ratio in a period of rising prices?
a. FIFO
b. LIFO
c. average cost
d. lower of average cost or market
ANSWER: b
POINTS: 1
76. Which of the following items would not be used in the calculation of the cost-to-retail ratio if the FIFO retail
inventory method were used to determine the ending inventory?
a. net markdowns
b. purchases
c. beginning inventory
d. freight-in charges
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
77. Which of the following is not a general assumption that underlies the retail inventory method?
a. All inventory items are homogenous and have the same markup.
b. The items in ending inventory are in proportion to the items available for sale.
c. There were no changes in the retail price of inventory purchased during the period except the changes captured
by markups and markdowns.
d. The cost-to-retail ratio remains constant over the accounting period
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
78. Ann Co. uses the dollar-value LIFO retail method. The beginning inventory, purchased when the price index was 100,
had a retail value of $4,000 and a cost of $3,600. During the period, purchases amounted to $60,000 at retail ($52,800
at cost). Sales amounted to $56,300. The year-end price index was 110. What is the cost of ending inventory?
a. $6,240
b. $6,504
c. $6,570
d. $6,900
ANSWER: b
POINTS: 1
79. Kelcie Sports uses the dollar-value LIFO retail method. The price index on January 1, 2016, was 100, and on that date
the inventory was $20,000 (retail) and $14,000 (cost). Additional information follows:
2016 2017
Purchases, retail $160,000 $204,000
Purchases, cost 115,200 150,960
Sales 160,416 202,160
Price index, Dec. 31. 102 103
What is the cost of the December 31, 2017, inventory (to the nearest dollar)?
a. $14,610
b. $14,638
c. $14,660
d. $15,854
ANSWER: c
POINTS: 1
80. Which of the following statements is true?
a. Application of LIFO for financial reporting purposes must follow the tax laws applicable to LIFO.
b. A company must use FIFO for both tax reporting and financial statement reporting.
c. A company may use FIFO to valuate inventory and LIFO for financial statement reporting purposes.
d. LIFO must be used for financial reporting if it is used for tax purposes.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
81. The dollar-value LIFO cost-to-cost retail ratio does not include
a. beginning inventory.
b. net markups and markdowns.
c. ending inventory.
d. purchases.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
82. The dollar-value LIFO retail method

a. combines the principle of retail LIFO with dollar-value LIFO.
b. does not really include retail LIFO in the calculation process.
c. is a new principle.
d. is an interesting theoretical exercise that is rarely used in practice.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
83. What is the effect on net income if a company fails to record a purchase in transit (FOB shipping point) and also fails
to include the purchase in physical inventory?
a. Income is overstated.
b. Income is understated.
c. Income is correct.
d. Not enough information is provided to determine the answer.
ANSWER: c
POINTS: 1
KEYWORDS: Bloom’s: Applying
84. If purchases are recorded correctly but ending physical inventory is understated, which one of the following situations
occurs for the current year?
a. Working capital is understated and net income is overstated.
b. Working capital and net income are understated.
c. Working capital is overstated and net income is understated.
d. Working capital and net income are overstated.
ANSWER: b
POINTS: 1
85. The accountant for Angie Company made the following errors related to purchases of merchandise and ending
inventory in 2016:
1. A $2,200 purchase of merchandise on credit was not recorded or included in ending

inventory.
2. A $3,180 purchase of merchandise on credit was recorded, but it was inadvertently omitted
from the end-of-year physical inventory count.
Assuming a periodic inventory system, Angie’s Company's 2016 net income will be
a. understated by $3,180.
b. understated by $2,380.
c. overstated by $5,380.
d. overstated by $3,180.
ANSWER: a
POINTS: 1
86. The accountant for the Daneen Company made the following errors related to purchases of merchandise and ending
inventory in 2016:
1. A $3,100 purchase of merchandise on credit early in 2015 was recorded and included in
ending inventory at December 31, 2016.
2. A $2,750 purchase of merchandise on credit in 2014 was recorded, but it was not included
in the end-of-year physical inventory count.
Assuming a periodic inventory system, Daneen Company's 2016 net income will be
a. understated by $350.
d. overstated by $350.
ANSWER: d
POINTS: 1
87. Barry Corp. reported 2016 net income of $40,000. However, the ending inventory in 2015 had been understated by
$3,000, and 2016's ending inventory had been overstated by $6,000. Barry's correct net income for 2016 was
a. $31,000
b. $34,000
c. $43,000
d. $46,000
ANSWER: a
POINTS: 1
88. A purchase on credit is recorded twice and not corrected during the year-end physical inventory. Which of the
following statements correctly describes the impact of this error?
a. The current year income on the income statement is correct because purchases are overstated and ending
inventory is overstated.
b. The current year balance sheet ending inventory and accounts payable are understated.
c. The succeeding year income on the income statement is incorrect because beginning inventory is understated.
d. The succeeding year purchases are understated when the prior year purchases are corrected.
ANSWER: a
POINTS: 1
89. The correct net income for Sarah Corp. was $53,500. However, the company reported incorrect net income because
beginning inventory was understated by $2,500, purchases were overstated by $2,000, and ending inventory was
overstated by $2,000. What net income did Sarah Corp. report?
a. $49,000
b. $51,000
c. $56,000
d. $58,000
ANSWER: c
POINTS: 1
90. The accountant for Ella Company made the following errors related to the inventory in 2016:
1. The beginning inventory for 2016 was understated by $1,350 due to an error in the physical
count.
2. A $1,500 purchase of merchandise in transit was not recorded as a purchase and was
not included in ending inventory.
Assuming a periodic inventory system, Ella Company's 2016 net income will be
b. overstated by $1,350.
ANSWER: b
POINTS: 1
91. Bennett Company's accountant made the following errors related to merchandise inventory in 2016:
1. The beginning inventory for 2016 was overstated by $1,900 due to an error in the physical
count.
2. A $1,150 purchase of merchandise on credit was not recorded, but the items were included
in the ending inventory.
Assuming a periodic inventory system, Bennett Company's 2016 cost of goods sold will be
c. overstated by $750.
d. overstated by $1,900.
ANSWER: c
POINTS: 1
92. The accountant for Lee Company made the following errors related to merchandise inventory in 2016:
1. The beginning inventory for 2016 was overstated by $750 due to an error in the physical
count.
2. A $1,300 purchase of merchandise on credit was not recorded and was not included in the
ending inventory.
Assuming a periodic inventory system, Lee Company's 2016 cost of goods sold will be
ANSWER: d
POINTS: 1
93. The accountant for Frieda Company did not record a purchase of merchandise on credit or include the items in the
ending inventory. Assuming a periodic inventory system, the balance sheet effects of these omissions on assets,
liabilities, and retained earnings would be
Set Assets Liabilities Retained Earnings

I. Understate Understate Understate
II. Understate Understate No effect
III. No effect Understate No effect
IV. Understate No effect Understate
a. Set I
b. Set II
c. Set III
d. Set IV
ANSWER: b
POINTS: 1
94. The accountant for the Issenock Company did not record a purchase of merchandise on credit for the current year, but
the merchandise was correctly included in the ending inventory. Assuming a periodic inventory system, how would
assets, liabilities, and retained earnings be affected on the year-end balance sheet?
Set Assets Liabilities Retained Earnings

I. No effect Understated Understated
II. Understated Understated No effect
III. No effect No effect Overstated
IV. No effect Understated Overstated
a. Set I
b. Set II
c. Set III
d. Set IV
ANSWER: d
POINTS: 1
95. The accountant for Suzanne Company made the following errors related to inventory in 2017:
1. The beginning inventory for 2017 was overstated by $1,375 due to an error in the physical
count.
2. A $1,650 purchase of merchandise on credit in 2017 was not recorded or included in the
ending inventory.
Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected
in 2017 by these errors?
Set Cost of Goods Sold Gross Profit Net Income

I. Overstated Understated Understated
II. Overstated Understated No effect
III. Understated Overstated Overstated
IV. No effect No effect No effect
a. Set I
b. Set II
c. Set III
d. Set IV
ANSWER: a
POINTS: 1
96. What is the effect on net income for the current year if a company fails to record a purchase of materials in transit
(FOB shipping point) but includes the materials in physical inventory at year-end?
a. Net income is overstated.
b. Net income is understated.
c. Net income is unaffected.
d. Not enough information is provided to determine the answer.
ANSWER: a
POINTS: 1
97. If in the current year a purchase was not recorded but the purchased item was included in ending physical inventory,
which one of the following situations occurs for the current year?
a. Working capital is understated, and net income is overstated.
b. Working capital and net income are understated.
c. Working capital is overstated, and net income is understated.
d. Working capital and net income are overstated.
ANSWER: d
POINTS: 1
98. The accountant for the Hilga Company recorded a purchase of merchandise on credit for the current year, but the
merchandise was shipped FOB destination and did not arrive until after current year-end. Assuming a periodic
inventory system, how would assets, liabilities, and retained earnings be affected on the year-end balance sheet?
Assets Liabilities Retained Earnings

I. No effect Understated Understated
II. Understated Understated Understated
III. No effect Overstated Overstated
IV. No effect Overstated Understated
a. I
b. II
c. III
d. IV
ANSWER: d
POINTS: 1
Another random document with
no related content on Scribd:
"You remember it?" I said, watching him.
He shook his head slowly, then ran his finger around the circles
embossed on the cover.
"This pattern," he said. "It signifies...."
"Go on, Foster," I said. "Signifies what?"
"I'm sorry," he said. "I don't remember."
I took the book and sat looking at it. It wouldn't do any good to turn
myself in and tell them the whole story; they wouldn't believe me, and
I wouldn't blame them. I didn't really believe it myself, and I'd lived
through it. But then, maybe I was just imagining that Foster looked
younger. After all, a good night's rest—
I looked at Foster, and almost groaned again. Twenty was stretching
it; eighteen was more like it. I was willing to swear he'd never shaved
in his life.
"Foster," I said. "It's got to be in this book. Who you are, where you
came from—It's the only hope I've got."
"I suggest we read it, then," Foster said.
"A bright idea," I said, "Why didn't I think of that?" I thumbed through
the book to the section in English and read for an hour. Starting with
the entry dated January 19, 1710, the writer had scribbled a few lines
every few months. He seemed to be some kind of pioneer in the
Virginia Colony. He bitched about prices, and the Indians, and the
ignorance of the other settlers, and every now and then threw in a
remark about the Enemy. He often took long trips, and when he got
home, he bitched about those, too.
"It's a funny thing, Foster," I said. "This is supposed to have been
written over a period of a couple of hundred years, but it's all in the
same hand. That's kind of odd, isn't it?"
"Why should a man's handwriting change?" Foster said.
"Well, it might get a little shaky there toward the last, don't you
agree?"
"Why is that?"
"I'll spell it out, Foster," I said. "Most people don't live that long. A
hundred years is stretching it, to say nothing of two."
"This must be a very violent world, then," Foster said.
"Skip it," I said. "You talk like you're just visiting. By the way; do you
remember how to write?"
Foster looked thoughtful. "Yes," he said. "I can write."
I handed him the book and the stylus. "Try it," I said. Foster opened to
a blank page, wrote, and handed the book back to me.
"Always and always and always," I read.
I looked at Foster. "What does that mean?" I looked at the words
again, then quickly flipped to the pages written in English. I was no
expert on penmanship, but this came up and cracked me right in the
eye.
The book was written in Foster's hand.
"It doesn't make sense," I was saying for the fortieth time. Foster
nodded sympathetic agreement.
"Why would you write this yourself, and then spend all that time and
money trying to have it deciphered? You said experts worked on it
and couldn't break it. But," I went on, "you must have known you
wrote it; you knew your own handwriting. But on the other hand, you
had amnesia before; you had the idea you might have told something
about yourself in the book...."
I sighed, leaned back and tossed the book over to Foster. "Here, you
read awhile," I said. "I'm arguing with myself and I can't tell who's
winning."
Foster looked the book over carefully.
"This is odd," he said.
"What's odd?"
"The book is made of khaff. It is a permanent material—and yet it
shows damage."
I sat perfectly still and waited.
"Here on the back cover," Foster said. "A scuffed area. Since this is
khaff, it cannot be an actual scar. It must have been placed there."
I grabbed the book and looked. There was a faint mark across the
back cover, as though the book had been scraped on something
sharp. I remembered how much luck I had had with a knife. The mark
had been put here, disguised as a casual nick in the finish. It had to
mean something.
"How do you know what the material is?" I asked.
Foster looked surprised. "In the same way that I know the window is
of glass," he said. "I simply know."
"Speaking of glass," I said, "wait till I get my hands on a microscope.
Then maybe we'll begin to get some answers."
CHAPTER IV
The two-hundred pound señorita put a pot of black Cuban coffee and
a pitcher of salted milk down beside the two chipped cups, leered at
me in a way that might have been appealing thirty years before, and
waddled back to the kitchen. I poured a cup, gulped half of it, and
shuddered. In the street outside the cafe a guitar cried Estrellita.
"Okay, Foster," I said. "Here's what I've got: The first half of the book
is in pot-hooks—I can't read that. But this middle section: the part
coded in regular letters—it's actually encrypted English. It's a sort of
resumé of what happened." I picked up the sheets of paper on which
I had transcribed my deciphering of the coded section of the book,
using the key that had been micro-engraved in the fake scratch on
the back cover.
I read:
"For the first time, I am afraid. My attempt to construct the
communicator called down the Hunters upon me. I made such a
shield as I could contrive, and sought their nesting place.
"I came there and it was in that place that I knew of old, and it was no
hive, but a pit in the ground, built by men of the Two Worlds. And I
would have come into it, but the Hunters swarmed in their multitudes.
I fought them and killed many, but at the last I fled away. I came to the
western shore, and there I hired bold sailors and a poor craft, and set
forth.
"In forty-nine days we came to shore in this wilderness, and here
were men as from the dawn of time, and I fought them, and when
they had learned fear, I lived among them in peace, and the Hunters
have not found this place. Now it may be that my saga ends here, but
I will do what I am able.
"The Change may soon come upon me; I must prepare for the
stranger who will come after me. All that he must know is in these
pages. And I say to him:
"Have patience, for the time of this race draws close. Venture not
again on the Eastern continent, but wait, for soon the Northern sailors
must come in numbers into this wilderness. Seek out their cleverest
metal-workers, and when it may be, devise a shield, and only then
return to the pit of the Hunters. It lies in the plain, 50/10,000-parts of
the girth of this (?) to the west of the Great Chalk Face, and 1470
parts north from the median line, as I reckon. The stones mark it well
with the sign of the Two Worlds."
I looked across at Foster. "It goes on then with a blow-by-blow

account of dealings with aborigines. He was trying to get them
civilized in a hurry. They figured he was a god and he set them to
work building roads and cutting stone and learning mathematics and
so on. He was doing all he could to set things up so this stranger who
was to follow him would know the score, and carry on the good work."
Foster's eyes were on my face. "What is the nature of the Change he
speaks of?"
"He never says—but I suppose he's talking about death," I said. "I
don't know where the stranger is supposed to come from."
"Listen to me, Legion," Foster said. There was a hint of the old
anxious look in his eyes. "I think I know what the Change was. I think
he knew he would forget—"
"You've got amnesia on the brain, old buddy," I said.
"—and the stranger is—himself. A man without a memory."
I sat frowning at Foster. "Yeah, maybe," I said. "Go on."
"And he says that all that the stranger needs to know is there—in the
book."
"Not in the part I decoded." I said. "He describes how they're coming
along with the road-building job, and how the new mine panned out—
but there's nothing about what the Hunters are, or what had gone on
before he tangled with them the first time."
"It must be there, Legion; but in the first section, the part written in
alien symbols."
"Maybe," I said. "But why the hell didn't he give us a key to that part?"
"I think he assumed that the stranger—himself—would remember the
old writing," Foster said. "How could he know that it would be
forgotten with the rest?"
"Your guess is as good as any," I said. "Maybe better; you know how
it feels to lose your memory."
"But we've learned a few things," Foster said. "The pit of the Hunters
—we have the location."
"If you call this 'ten-thousand parts to the west of the chalk face' a
location," I said.
"We know more than that," Foster said. "He mentions a plain; and it
must lie on a continent to the east—"
"If you assume that he sailed from Europe to America, then the
continent to the east would be Europe," I said. "But maybe he went
from Africa to South America, or—"
"The mention of Northern sailors—that suggests the Vikings—"
"You seem to know a little history, Foster," I said. "You've got a lot of
odd facts tucked away."
"We need maps," Foster said. "We'll look for a plain near the sea—"
"Not necessarily."
"—and with a formation called a chalk face to the east."
"What's this 'median line' business mean?" I said. "And the bit about
ten thousand parts of something?"
"I don't know," Foster said. "But we must have maps."
"I bought some this afternoon," I said. "I also got a dime-store globe. I
thought we might need them. What the hell! let's get out of this and
back to the room, where we can spread out. I know it's a grim
prospect, but...." I got to my feet, dropped some coins on the table,
and led the way out.
It was a short half block to the flea trap we called home. The roaches
scurried as we passed up the dark stairway to our not much brighter
room. I crossed to the bureau and opened a drawer.
"The globe," Foster said, taking it in his hands. "I wonder if perhaps
he meant a ten-thousandth part of the circumference of the earth?"
"What would he know about—"
"Disregard the anachronistic aspect of it," Foster said. "The man who
wrote the book knew many things. We'll have to start with some
assumptions. Let's make the obvious ones: that we're looking for a
plain on the west coast of Europe, lying—" He pulled a chair up to the
scabrous table and riffled through to one of my scribbled sheets:
"50/10,000s of the circumference of the earth—that would be about
125 miles—west of a chalk formation, and 3675 miles north of a
median line...."
"Maybe," I said, "he means the Equator."
"Certainly," Foster said. "Why not? That would mean our plain lies on
a line through—" he studied the small globe. "Warsaw, and south of
Amsterdam."
"But this bit about a rock out-cropping," I said. "How do we find out if
there's any conspicuous chalk formation there?"
"We can consult a geology text," Foster said. "There may be a library
nearby."
"The only chalk deposits I ever heard about," I said, "are the white
cliffs of Dover."
"White cliffs...."
We both reached for the globe at once.
"125 miles west of the chalk cliffs," Foster said. He ran a finger over
the globe. "North of London, but south of Birmingham. That puts us
reasonably near the sea—"
"Where's that atlas?" I said. I rummaged, came up with a cheap
tourists' edition, flipped the pages.
"Here's England," I said. "Now we look for a plain."
Foster put a finger on the map. "Here," he said. "A large plain—called
Salisbury."
"Large is right," I said. "It would take years to find a stone cairn on
that. We're getting excited about nothing. We're looking for a hole in
the ground, hundreds of years old—if this lousy notebook means
anything—maybe marked with a few stones—in the middle of miles of
plain. And it's all guesswork anyway...." I took the atlas, turned the
page.
"I don't know what I expected to get out of decoding those pages," I
said. "But I was hoping for more than this."
"I think we should try, Legion," Foster said. "We can go there, search
over the ground. It would be costly, but not impossible. We can start
by gathering capital—"
"Wait a minute, Foster," I said. I was staring at a larger-scale map
showing southern England. Suddenly my heart was thudding. I put a
finger on a tiny dot in the center of Salisbury Plain.
"Six, two and even," I said. "There's your Pit of the Hunters...."
Foster leaned over, read the fine print.
"Stonehenge."
I read from the encyclopedia page:

"—this great stone structure, lying on the Plain of Salisbury, Wiltshire,
England, is pre-eminent among megalithic monuments of the ancient
world.
"Within a circular ditch 300' in diameter, stones up to 22' in height are
arranged in concentric circles. The central altar stone, over 16' long,
is approached from the north-east by a broad roadway called the
Avenue—"
"It is not an altar," Foster said.
"How do you know?"
"Because—" Foster frowned. "I know, that's all."
"The journal said the stones were arranged in the sign of the Two
Worlds," I said. "That means the concentric circles, I suppose; the
same thing that's stamped on the cover of the notebook."
"And the ring," Foster said.
"Let me read the rest," I said.
"A great sarsen stone stands upright in the Avenue; the axis through
the two stones, when erected, pointed directly to the rising of the sun
on Midsummer day. Calculations based on this observation indicate a
date of approximately 1600 B.C."
Foster took the book and I sat on the window sill and looked out at a
big Florida moon. I lit a cigarette, dragged on it, and thought about a
man who long ago had crossed the North Atlantic in a dragon boat to
be a god among the Indians. I wondered where he came from, and
what it was he was looking for, and what kept him going in spite of the
hell that showed in the spare lines of the journal he kept. If, I
reminded myself, he had ever existed....
Foster was poring over the book. "Look," I said. "Let's get back to
earth. We have things to think about, plans to make. The fairy tales
can wait until later."
"What do you suggest?" Foster said. "That we forget the things
you've told me, and the things we've read here, discard the journal,
and abandon the attempt to find the answers?"
"No," I said. "I'm no sorehead. Sure, there's some things here that
somebody ought to look into—some day. But right now what I want is
the cops off my neck. And I've been thinking. I'll dictate a letter; you
write it—your lawyers know your handwriting. Tell them you were on
the thin edge of a nervous breakdown—that's why all the artillery
around your house—and you made up your mind suddenly to get
away from it all. Tell them you don't want to be bothered, that's why
you're travelling incognito, and that the northern mobster that came to
see you was just stupid, not a killer. That ought to at least cool off the
cops—"
Foster looked thoughtful. "That's an excellent suggestion," he said.
"Then we need merely to arrange for passage to England, and
proceed with the investigation."
"You don't get the idea," I said. "You can arrange things by mail so we
get our hands on that dough of yours—"
"Any such attempt would merely bring the police down on us," Foster
said. "You've already pointed out the unwisdom of attempting to pass
myself off as—myself."
"There ought to be a way...." I said.
"We have only one avenue of inquiry," Foster said. "We have no
choice but to explore it. We'll take passage on a ship to England—"
"What'll we use for money—and papers? It would cost hundreds.
Unless—" I added, "—we worked our way. But that's no good. We'd
still need passports—plus union cards and seamen's tickets."
"Your friend," Foster said. "The one who prepares passports. Can't he
produce the other papers as well?"
"Yeah," I said. "I guess so. But it will cost us."
"I'm sure we can find a way to pay," Foster said. "Will you see him—
early in the morning?"
I looked around the blowsy room. Hot night air stirred a geranium
wilting in a tin can on the window sill. An odor of bad cooking and
worse plumbing floated up from the street.
"At least," I said, "it would mean getting out of here."
CHAPTER V
It was almost sundown when Foster and I pushed through the door to
the saloon bar at the Ancient Sinner and found a corner table. I
ordered a pint of mild-and-bitter and watched Foster spread out his
maps and papers. Behind us, there was a murmur of conversation,
and the thump of darts against a board.
"When are you going to give up and admit we're wasting our time?" I
said. "Two weeks of tramping over the same ground, and we end up
in the same place; sitting in a country pub drinking warm beer."
"We've hardly begun our investigation," Foster said mildly.
"You keep saying that," I said. "But if there ever was anything in that
rock-pile, it's long gone. The archaeologists have been digging over
the site for years, and they haven't come up with anything."
"They didn't know what to look for," Foster said. "They were searching
for indications of religious significance, human sacrifice—that sort of
thing."
"We don't know what we're looking for either," I said. "Unless you
think maybe we'll meet the Hunters hiding under a loose stone."
"You say that sardonically," Foster said. "But I don't consider it
impossible."
"I know," I said. "You've convinced yourself that the Hunters were
after us back at Mayport when we ran off like a pair of idiots."
"From what you've told me of the circumstances—" Foster began.
"I know; you don't consider it impossible. That's the trouble with you;
you don't consider anything impossible. It would make life a lot easier
for me if you'd let me rule out a few items—like leprechauns who
hang out at Stonehenge."
Foster looked at me, half-smiling. It had only been a few weeks since
he woke up from a nap looking like a senior class president who
hadn't made up his mind whether to be a preacher or a movie star but
he had already lost that mild, innocent air. He learned fast, and day
by day I had seen his old personality re-emerge and—in spite of my
attempts to hold onto the ascendency—dominate our partnership.
"It's a failing of your culture," Foster said, "that hypothesis becomes
dogma almost overnight. You're too close to your neolithic, when the
blind acceptance of tribal lore had survival value. Having learned to
evoke the fire god from sticks, by rote, you tend to extend the
principle to all 'established facts'."
"Here's an established fact for you," I said. "We've got fifteen pounds
left—that's about forty dollars. It's time we figured out where to go
from here, before somebody starts checking up on those phoney
papers of ours."
Foster shook his head. "I'm not satisfied that we've exhausted the
possibilities here. I've been studying the geometric relationships
between the various structures; I have some ideas I want to check. I
think it might be a good idea to go out at night, when we can work
without the usual crowd of tourists observing every move. We'll have
a bite to eat here and wait until dark to start out."
The publican brought us plates of cold meat and potato salad. I

worked on a thin but durable slice of ham and thought about all the
people, somewhere, who were sitting down now to gracious meals in
the glitter of crystal and silver. I was getting farther from my island all
the time—And it was nobody's fault but mine.
"The Ancient Sinner," I said. "That's me."
Foster looked up. "Curious names these old pubs have," he said. "I
suppose in some cases the origins are lost in antiquity."
"Why don't they think up something cheery," I said. "Like 'The
Paradise Bar and Grill' or 'The Happy Hour Cafe'. Did you notice the
sign hanging outside?"
"No."
"A picture of a skeleton. He's holding one hand up like a Yankee
evangelist prophesying doom. You can see it through the window
there."
Foster turned and looked out at the weathered sign creaking in the
evening wind. He looked at it for a long time. There was a strange
look around his eyes.
"What's the matter—?" I started.
Foster ignored me, waved to the proprietor, a short fat countryman.
He came over to the table, wiping his hands on his apron.
"A very interesting old building," Foster said. "We've been admiring it.
When was it built?"
"Well, sir," the publican said. "This here house is a many a hundred
year old. It were built by the monks, they say, from the monastery
what used to stand nearby here. It were tore down by the king's men,
Henry, that was, what time he drove the papists out."
"That would be Henry the Eighth, I suppose?"
"Aye, it would that. And this house is all that were spared, it being the
brewing-house, as the king said were a worthwhile institution, and he
laid on a tithe, that two kegs of stout was to be laid by for the king's
use each brewing time."
"Very interesting," Foster said. "Is the custom still continued?"
The publican shook his head. "It were ended in my granfer's time, it
being that the queen were a tee-totaller."
"How did it acquire the curious name—'the Ancient Sinner'?"
"The tale is," the publican said, "that one day a lay brother of the
order were digging about yonder on the plain by the great stones, in
search of the Druid's treasure, albeit the Abbott had forbid him to go
nigh the heathen ground, and he come on the bones of a man, and
being of a kindly turn, he had the thought to give them Christian
burial. Now, knowing the Abbott would nae permit it, he set to work to
dig a grave by moonlight in holy ground, under the monastery walls.
But the Abbott, being wakeful, were abroad and come on the brother
a-digging, and when he asked the why of it, the lay brother having
visions of penances to burden him for many a day, he ups and tells
the Abbott it were a ale cellar he were about digging, and the Abbott,
not being without wisdom, clapped him on the back, and went on his
way. And so it was the ale-house got built, and blessed by the Abbott,
and with it the bones that was laid away under the floor beneath the
ale-casks."
"So the ancient sinner is buried under the floor?"

"Aye, so the tale goes, though I've not dug for him meself. But the
house has been knowed by the name these four hundred year."
"Where was it you said the lay brother was digging?"
"On the plain yonder, by the Druid's stones, what they call
Stonehenge," the publican said. He picked up the empty glasses.
"What about another, gentlemen?"
"Certainly," Foster said. He sat quietly across from me, his features
composed—but I could see there was tension under the surface
calm.
"What's this all about?" I asked softly. "When did you get so
interested in local history?"
"Later," Foster murmured. "Keep looking bored."
"That'll be easy," I said. The publican came back, placed heavy glass
mugs before us.
"You were telling us about the lay brother finding the bones," Foster
said. "You say they were buried in Stonehenge?"
The publican cleared his throat, glanced sideways at Foster.
"The gentlemen wouldna be from the University now, I suppose?" he
said.
"Let's just say," Foster said easily, smiling, "that we have a great
interest in these bits of lore—an interest supported by modest funds,
of course."
The publican made a show of wiping at the rings on the table top.
"A costly business, I wager," he said. "Digging about in odd places
and all. Now, knowing where to dig; that's important, I'll be bound."
"Very important," Foster said. "Worth five pounds, easily."
"Twere my granfer told me of the spot; took me out by moonlight, he
did, and showed me where his granfer had showed him. Told me it
were a fine great secret, the likes of which a simple man could well
take pride in."
"And an additional five pounds as a token of my personal esteem,"
Foster said.
The publican eyed me. "Well, a secret as was handed down father to
son...."
"And, of course, my associate wishes to express his esteem, too,"
Foster said. "Another five pounds worth."
"That's all the esteem the budget will bear, Mr. Foster," I said. I got
out the fifteen pounds and passed the money across to him. "I hope
you haven't forgotten those people back home who wanted to talk to
us. They'll be getting in touch with us any time now, I'll bet."
Foster rolled up the bills and held them in his hand. "That's true, Mr.
Legion," he said. "Perhaps we shouldn't take the time...."
"But being it's for the advancement of science," the publican said, "I'm
willing to make the sacrifice."
"We'll want to go out tonight," Foster said. "We have a very tight
schedule."
The landlord dickered with Foster for another five minutes before he
agreed to guide us to the spot where the skeleton had been found, as
soon as the pub was closed for the night. He took the money and
went back to the bar.
"Now tell me," I began.
"Look at the sign-board again," Foster said. I looked. The skull
smiled, holding up a hand.
"I see it," I said. "But it doesn't explain why you handed over our last
buck—"
"Look at the hand," Foster said. "Look at the ring on the finger."
I looked again. A heavy ring was painted on the bony index finger,
with a pattern of concentric circles. It was a duplicate of the one on
Foster's finger.
"Don't drink too much," Foster said. "You may need your wits about
you tonight."
The publican pulled the battered Morris Minor to the side of the
highway and set the brake.
"This is as close as we best take the machine," he said. We got out,
looked across the rolling plain where the megaliths of Stonehenge
loomed against the last glow of sunset.
The publican rummaged in the boot, produced a ragged blanket and
two long four-cell flashlights, gave one to Foster and the other to me.
"Do nae use the electric torches until I tell ye," he said, "lest the whole
county see there's folks abroad here." We watched as he draped the
blanket over a barbed-wire fence, clambered over, and started across
the barren field. Foster and I followed, not talking.
The plain was deserted. A lonely light showed on a distant slope. It
was a dark night with no moon. I could hardly see the ground ahead.
A car moved along a distant road, its headlights bobbing.
We moved past the outer ring of stones, skirting fallen slabs twenty
feet long.
"We'll break our necks," I said. "Let's have one of the flashlights."
"Not yet," Foster whispered.
Our guide paused; we came up to him.
"It were a mortal long time since I were last hereabouts," he said. "I
best take me bearings off the Friar's Heel...."
"What's that?"
"Yon great stone, standing alone in the Avenue." We squinted; it was
barely visible as a dark shape against the sky.
"The bones were buried there?" Foster asked.
"Nay; all by theirself, they was. Now it were twenty paces, granfer
said, him bein fifteen stone and long in the leg...." The publican
muttered.
"What's to keep him from just pointing to a spot after awhile," I said to
Foster, "and saying 'This is it'?"
"We'll wait and see," Foster said.
"They were a hollow, as it were, in the earth," the publican said, "with
a bit of stone by it. I reckon it were fifty paces from here—" he
pointed, "—yonder."
"I don't see anything," I said.
"Let's take a closer look." Foster started off and I followed, the
publican trailing behind. I made out a dim shape, with a deep
depression in the earth before it.
"This could be the spot," Foster said. "Old graves often sink—"
Suddenly he grabbed my arm. "Look...!"

The surface of the ground before us seemed to tremble, then heave.
Foster snapped on his flashlight. The earth at the bottom of the
hollow rose, cracked open. A boiling mass of lumi-self, rose,
bumbling along the face of the weathered stone.
"Saints preserve us," the publican said in a choked voice. Foster and
I stood, rooted to the spot, watching. The lone globe rose higher—
and abruptly shot straight toward us. Foster threw up an arm and
ducked. The ball of light veered, struck him a glancing blow and
darted off a few yards, hovered. In an instant, the air was alive with
the spheres, boiling up from the ground, and hurtling toward us,
buzzing like a hive of yellow-jackets. Foster's flashlight lanced out
toward the swarm.
"Use your light, Legion!" he shouted hoarsely. I was still standing,
frozen. The globes rushed straight at Foster, ignoring me. Behind me,
I heard the publican turn and run. I fumbled with the flashlight switch,
snapped it on, swung the beam of white light on Foster. The globe at
his head vanished as the light touched it. More globes swarmed to
Foster—and popped like soap bubbles in the flashlight's glare—but
more swarmed to take their place. Foster reeled, fighting at them. He
swung the light—and I heard it smash against the stone behind him.
In the instant darkness, the globes clustered thick around his head.
"Foster," I yelled, "run!"
He got no more than five yards before he staggered, went to his
knees. "Cover," he croaked. He fell on his face. I rushed the mass of
darting globes, took up a stance straddling his body. A sulphurous
reek hung around me. I coughed, concentrated on beaming the lights
around Foster's head. No more were rising from the crack in the earth
now. A suffocating cloud pressed around both of us, but it was Foster
they went for. I thought of the slab; if I could get my back to it, I might
have a chance. I stooped, got a grip on Foster's coat, and started
back, dragging him. The lights boiled around me. I swept the beam of
light and kept going until my back slammed against the stone. I
crouched against it. Now they could only come from the front.
I glanced at the cleft the lights had come from. It looked big enough to
get Foster into. That would give him some protection. I tumbled him
over the edge, then flattened my back against the slab and settled
down to fight in earnest.
I worked in a pattern, sweeping vertically, then horizontally. The
globes ignored me, drove toward the cleft, fighting to get at Foster,
and I swept them away as they came. The cloud around me was
smaller now, the attack less ravenous. I picked out individual globes,
snuffed them out. The hum became ragged, faltered. Then there
were only a few globes around me, milling wildly, disorganized. The
last half dozen fled, bumbling away across the plain.
I slumped against the rock, sweat running down into my eyes, my
lungs burning with the sulphur.
"Foster," I gasped. "Are you all right?"
He didn't answer. I flashed the light onto the cleft. It showed me damp
clay, a few pebbles.
Foster was gone.
CHAPTER VI
I scrambled to the edge of the pit, played the light around inside. It
shelved back at one side, and a dark mouth showed, sloping down
into the earth: the hiding place the globes had swarmed from.
Foster was wedged in the opening. I scrambled down beside him,
tugged him back to level ground. He was still breathing; that was
something.
I wondered if the pub owner would come back, now that the lights
were gone—or if he'd tell someone what had happened, bring out a
search party. Somehow, I doubted it. He didn't seem like the type to
ask for trouble with the ghosts of ancient sinners.
Foster groaned, opened his eyes. "Where are ... they?" he muttered.
"Take it easy, Foster," I said. "You're OK now."
"Legion," Foster said. He tried to sit up. "The Hunters...."
"I worked them over with the flashlights. They're gone."
"That means...."
"Let's not worry about what it means. Let's just get out of here."
"The Hunters—they burst out of the ground—from a cleft in the
earth."
"That's right. You were half-way into the hole. I guess that's where
they were hiding."
"The Pit of the Hunters," Foster said.
"If you say so," I said. "Lucky you didn't go down it."
"Legion, give me the flashlight."
"I feel something coming on that I'm not going to like," I said. I handed
him the light and he flashed it into the tunnel mouth. I saw a polished
roof of black glass arching four feet over the rubble-strewn bottom of
the shaft. A stone, dislodged by my movement, clattered away down
the 30° slope.
"That tunnel's man-made," I said. "And I don't mean neolithic man."

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Intermediate Accounting Reporting and

Analysis 2nd Edition Wahlen Test Bank

Allowance to Reduce Inventory to Market x,xxx

Loss due to Market Valuation x,xxx

18. When applying lower of cost or market, market value

Estimated transportation costs for delivery $3.90

22. When comparing the lower of cost to market

Transportation costs $ 4.00

The net realizable value for this item is

26. Given the following information for the Raquel Company:

Date Cost Market

Item Per Unit

Transportation costs $ 5.00

The market value for this item is

39. Generally, valuing inventory above cost

January 1, 2016, inventory balance $12,500

44. Consider the following:

Code: A = Gross profit to net sales ratio

Which equation is correct?

Sales (1/1/16 through 6/3/16) $260,000

48. Given the following information for Bonnie Bunny Company:

Inventory (1/1/16) $ 330,000

50. The gross profit method is not used to

Sales (1/1/16 through 7/3/16) $240,000

Inventory (1/1/16) $ 130,000

FIFO Average Cost LIFO

What is the estimated cost of Alexandra’s inventory on June 30, 2016?

What is the FIFO value of ending inventory for Eloise Corp.?

What is the cost of ending inventory for Audrey Company?

What is the LIFO cost of the ending inventory?

What is the cost-to-retail percentage to be used for ending inventory calculations?

What is the cost-to-retail percentage to be used for ending inventory calculations?

82. The dollar-value LIFO retail method

1. A $2,200 purchase of merchandise on credit was not recorded or included in ending

Set Assets Liabilities Retained Earnings

Set Assets Liabilities Retained Earnings

Set Cost of Goods Sold Gross Profit Net Income

Assets Liabilities Retained Earnings

I looked across at Foster. "It goes on then with a blow-by-blow

I read from the encyclopedia page:

The publican brought us plates of cold meat and potato salad. I

"So the ancient sinner is buried under the floor?"

Suddenly he grabbed my arm. "Look...!"

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