Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
177. A company uses the retail inventory method and has the following information available
concerning its most recent accounting period:
At Cost At Retail
Beginning-of-period inventory $148,600 $ 245,200
Net purchases 677,400 1,229,800
Sales 1,200,000
1. What is the cost-to-retail ratio using the retail method?
2. What is the estimated cost of the ending inventory?
178. Fun Land Toy Stores has taken a physical count of its inventory at January 31, its fiscal
year-end. After reviewing the accounting records and documentation, the following items
have been discovered: (a) An invoice from Fleck Co. indicates that $30,000 of toys were
shipped to Fun Land on January 27, terms FOB shipping point. The toys and invoice did not
arrive at Fun Land until February 2 and were not included in the physical count. (b) An
invoice from Grande indicates that $8,000 of toys were shipped to Fun Land on January 29,
terms FOB destination. The toys and invoice did not arrive at Fun Land until February 2 and
were not included in the physical count. The physical count and cost assignment on January
31 prior to these two items is $440,000. The cost of goods sold for Fun Land is $2,100,000.
1. Calculate the amount that should be reported as ending inventory for Fun Land.
2. Calculate the days' sales in inventory before and after the appropriate adjustments for
inventory.
179. A company reported the current month purchase and sales data for its only product and
uses the perpetual inventory system. Determine the cost assigned to ending inventory and cost
of goods sold using FIFO.
Date Activities Units Acquired at Cost Units Sold at Retail
April 1 Beginning Inventory 175 units @ $15.00
4 Purchase 150 units @ $16.00
7 Sales 160 units @ $30.00
10 Purchase 200 units @ $17.00
16 Sales 250 units @ $30.00
25 Purchase 160 units @ $18.00
28 Sales 150 units @ $32.00
180. A company reported the current month purchase and sales data for its only product and
uses the perpetual inventory system. Determine the cost assigned to ending inventory and cost
of goods sold using LIFO.
Date Activities Units Acquired at Cost Units Sold at Retail
April 1 Beginning Inventory 175 units @ $15.00
4 Purchase 150 units @ $16.00
7 Sales 160 units @ $30.00
10 Purchase 200 units @ $17.00
16 Sales 250 units @ $30.00
25 Purchase 160 units @ $18.00
28 Sales 150 units @ $32.00
6-97
181. A company uses the retail inventory method and has the following information available
concerning its most recent accounting period:
At Cost At Retail
6-98
January 1 beginning inventory $167,340 $304,240
Cost of goods purchased 561,850 1,021,560
Sales 940,400
Sales returns 40,200
1. Use the retail inventory method to estimate the company’s year-end inventory at cost.
2. A year-end physical count at retail prices yields a total inventory of $404,800. Prepare a
calculation showing the company’s loss from shrinkage at cost and at retail.
Fill in the Blank Questions
182. If the _______________ is responsible for paying the freight, ownership of merchandise
inventory passes when goods are loaded on the transport vehicle.
183. If the _______________ is responsible for paying the freight, ownership of merchandise
inventory passes when the goods arrive at their destination.
184. Goods on consignment are goods that are shipped by the owner, called the
_______________, to another party called the ______________________.
185. _______________________ is the estimated sales price of damaged goods minus the
cost of making the sale.
186. Some companies use the _________________ principle or the __________________
constraint to avoid assigning incidental costs of acquiring merchandise to inventory.
187. The cost of an inventory item includes the _____________, plus ______________ costs
necessary to put it in a place and condition for sale.
188. When purchase costs regularly rise, the ___________________ method of inventory
valuation yields the highest gross profit and net income.
189. When purchase costs regularly rise, the ___________________ method of inventory
valuation yields the lowest gross profit and net income, providing a tax advantage.
190. An advantage of the _________________ method of inventory valuation is that it tends
to smooth out the effect of erratic changes in costs.
191. An overstated beginning inventory will ______________ cost of goods sold and
_____________ net income.
192. The __________ ratio reflects how much inventory is available in terms of days' sales.
193. The _____________________ is a measure of how quickly a merchandiser sells its
merchandise inventory.
194. The ______________________ method of assigning costs to inventory and cost of
goods sold exactly matches the costs of items with the revenues they generate and would be
used when items can be easily traced to the purchase invoice cost.
195. The _____________________ method of assigning costs to inventory and cost of goods
sold assumes that the inventory items are sold in the order acquired.
196. The ______________________ method of assigning costs to inventory and cost of
goods sold assumes that the most recent purchases are sold first.
197. The ______________________ method of assigning costs to inventory and cost of
goods sold required that we divide the cost of goods available for sale by the units of
inventory available at the time of each sale.
198. Regardless of what inventory method or system is used, cost of goods available for sale
must be allocated between ___________________ and ___________________.
199. When applying the lower of cost or market method of inventory valuation, market is
defined as the ______________________.
200. The _________________ method is commonly used to estimate the value of inventory
that has been destroyed, lost, or stolen.
