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Homework answers / question archive / McMurry University - FIN 334 1)In a periodic inventory system, the cost of inventories sold is: a
McMurry University - FIN 334
1)In a periodic inventory system, the cost of inventories sold is:
a.
Debited to accounts receivable.
b.
Credited to cost of goods sold.
c.
Debited to cost of goods sold.
d. Not recorded at the time goods are sold.
2) In applying LCM, market cannot be:
Multiple Choice
a.
Less than net realizable value.
b.
c. Greater than the normal profit.
d. Less than the normal profit margin.
e. Greater than net realizable value.
3) For companies using FIFO or average cost, inventory is valued at:
Multiple Choice
a.
Net realizable value.
b.
Cost.
c.
Replacement cost.
d.
Lower of cost or net realizable value.
4) Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $5,400 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
Multiple Choice
a.
$5,292.
b.
$5,508.
c.
$5,400.
d.
$2,646.
5) Nu Company reported the following pretax data for its first year of operations.
Net sales 2,820
Operating expenses 690
Ending inventories:
a. If FIFO is elected 1,230
6) What is Nu's gross profit ratio if it elects LIFO?
Multiple Choice
a.
60%.
b.
45%.
c.
55%.
d.
19%.
7) What amount should Mateo Corporation report as inventory in its December 31, 2018, balance sheet?
Multiple Choice
a.
$367,000.
b.
$427,000.
c.
$405,000.
d. $325,000.
8) During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:
Multiple Choice
a.
Higher under FIFO than LIFO.
b.
Higher under FIFO than average cost.
c.
Lower under average cost than LIFO.
d. Lower under LIFO than FIFO.
9) In applying the lower of cost or net realizable value rule, the inventory of surgical supplies would be valued at:
Multiple Choice
a.
$74.
b.
$126.
c.
$91.
d. $115.
10) What should be the reported value of Madison's inventory?
Multiple Choice
a.
$600,000.
b.
$620,000.
c.
$690,000.
d. $610,000.
11) In applying the lower of cost or market rule, the inventory of apparel would be valued at: Multiple Choice
a.
$108,000.
b.
$ 90,000.
c.
$110,000.
d.
$115,000.
12) Under the retail inventory method:
Multiple Choice
a.
A company measures inventory on its balance sheet by converting retail prices to cost.
b.
c. A company measures inventory on its balance sheet at current selling prices.
d. A company measures inventory on its balance sheet on a LIFO basis.
e. None of these answer choices are correct.
13) When using the gross profit method to estimate ending inventory, it is not necessary to know:
Multiple Choice
a.
b. Beginning inventory.
c. Net purchases.
d. Cost of goods sold.
e. Net sales.
14) Poppy Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,200, and its ending inventory on December 31 was understated by $16,900. In addition, a purchase of merchandise costing $20,400 was incorrectly recorded as a $2,040 purchase. None of these errors were discovered until the next year. As a result, Poppy's cost of goods sold for this year was:
Multiple Choice
a.
Overstated by $5,060.
b.
Understated by $48,560.
c.
Overstated by $31,660.
d. Understated by $31,660.
15) On July 10, 2018, Johnson Corporation signed a purchase commitment to purchase inventory for
$350,000 on or before February 15, 2019. The company's fiscal year-end is December 31. The contract was exercised on February 1, 2019, and the inventory was purchased for cash at the contract price. On the purchase date of February 1, the market price of the inventory was
$363,000. The market price of the inventory on December 31, 2018, was $327,000. The company uses a perpetual inventory system.
How much loss on purchase commitment will Johnson recognize in 2018?
Multiple Choice
a. $13,000.
b. $23,000.
c. $36,000.
d. None.
16) What is the estimated inventory on July 8 immediately prior to the fire?
Multiple Choice
a. $243,600.
b. $242,200.
c. $544,800.
d. $129,200.
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