Question 1 (1 point) Lower-of-cost-or-market Question 1 options: 1) is most cons
ID: 2357499 • Letter: Q
Question
Question 1 (1 point) Lower-of-cost-or-market Question 1 options: 1) is most conservative if applied to the total inventory. 2) is most conservative if applied to major categories of inventory. 3) is most conservative if applied to individual items of inventory. 4) must be applied to major categories for taxes. Save Question 2 (1 point) Paul Konerko Company sells product 2005WSC for $20 per unit. The cost of one unit of 2005WSC is $18, and the replacement cost is $17. The estimated cost to dispose of a unit is $4, and the normal profit is 40%. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market? Question 2 options: 1) $8. 2) $16. 3) $17. 4) $18. Save Question 3 (1 point) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported Question 3 options: 1) as a valuation account to Inventory on the balance sheet. 2) as a current liability. 3) as an appropriation of retained earnings. 4) on the income statement. Save Question 4 (1 point) Which statement is not true about the gross profit method of inventory valuation? Question 4 options: 1) It may be used to estimate inventories for interim statements. 2) It may be used to estimate inventories for annual statements. 3) It may be used by auditors. 4) None of these. Save Question 5 (1 point) To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should Question 5 options: 1) include markups but not markdowns. 2) include markups and markdowns. 3) ignore both markups and markdowns. 4) include markdowns but not markups. Save Question 6 (1 point) Hawkeye Auto Parts uses the retail method to estimate inventories. Data for the first six months of 2009 include: beginning inventory at cost and retail were $55,000 and $100,000, net purchases at cost and retail were $785,000 and $1,300,000, and sales during the first six months totaled $800,000. The estimated inventory at June 30, 2009, would be: Question 6 options: 1) $330,000. 2) $360,000. 3) $362,300. 4) None of these is correct. Save Question 7 (1 point) The following information is available for October for Jordan Company. Beginning inventoryExplanation / Answer
1)
b) is most conservative if applied to major categories of inventory
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8)
Cost to retail ratio = $378,000 ÷ ($562,000 + $68,000 – $30,000)
= 0.63
EI = $140,000 + $562,000 + $68,000 – $30,000 – $530,000
= $210,000 at retail
$210,000 – $140,000 = $70,000
Cost of inventory = $94,000 + ($70,000 × .63)
= $138,100.
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9)
Base year price:
EI = $210,000 ÷ 1.05
= $200,000
$140,000 @ cost = $94,000
= $140,305.