ACCT 350, Fall 2010
Quiz #5
Name: ______________________________________
1. Bell Inc. took a physical inventory at the end of the year and determined that $650,000
of goods were on hand. In addition, Bell, Inc. determined that $50,000 of goods that
were in transit that were shipped f.o.b. shipping were actually received two days after
the inventory count and that the company had $75,000 of goods out on consignment.
What amount should Bell report as inventory at the end of the year?
A) $650,000.
B) $700,000.
C) $725,000.
D) $775,000.
2.,
Risers Inc. reported total assets of $1,600,000 and net income of $85,000 for the current
year. Risers determined that inventory was understated by $23,000 at the beginning of
the year and $10,000 at the end of the year. What is the corrected amount for total assets
and net income for the year?
A) $1,610,000 and $95,000.
B) $1,590,000 and $98,000.
C) $1,610,000 and $72,000.
D) $1,600,000 and $85,000.
Use the following to answer questions 3-4:
The following information was available from the inventory records of Rich Company for January:
Unit Cost
Total Cost
Units
Balance at January 1
3,000
$9.77
$29,310
Purchases:
2,000
10.30
20,600
January 6
January 26
2,700
10.71
28,917
Sales:
January 7
(2,500)
January 31
(4,000)
Balance at January 31
1,200
3. Assuming that Rich does not maintain perpetual inventory records, what should be the
inventory at January 31, using the weighted-average inventory method, rounded to the
nearest dollar?
A) $12,606.
B) $12,284.
C) $12,312.
D) $12,432.
4. Assuming that Rich maintains perpetual inventory records, what should be the inventory
at January 31, using the moving-average inventory method, rounded to the nearest
dollar?
A) $12,606.
B) $12,284.
C) $12,312.
D) $12,432.
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Use the following to answer questions 5-6:
Niles Co. has the following data related to an item of inventory:
Inventory, March 1
Purchase, March 7
Purchase, March 16
Inventory, March 31
100 units @ $4.20
350 units @ $4.40
70 units @ $4.50
130 units
5. The value assigned to ending inventory if Niles uses LIFO is
A) $579.
B) $552.
C) $546.
D) $585.
6. The value assigned to cost of goods sold if Niles uses FIFO is
A) $579.
B) $552.
C) $1,723.
D) $1,696.
7. Willy World began using dollar-value LIFO for costing its inventory two years ago. The
ending inventory for the past two years in end-of-year dollars was $100,000 and
$150,000 and the year-end price indices were 1.0 and 1.2, respectively. Assuming the
current inventory at end of year prices equals $215,000 and the index for the current
year is 1.25, what is the ending inventory using dollar-value LIFO?
A) $177,500.
B) $186,400.
C) $190,000.
D) $188,750.
8. Opera Corp. uses the dollar-value LIFO method of computing its inventory cost. Data
for the past four years is as follows:
Year ended
December 31.
2009
2010
2011
Inventory at
End-of-year Prices
$ 65,000
126,000
135,000
Price
Index
1.00
1.05
1.10
What is the 2009 inventory balance using dollar-value LIFO?
A) $65,000.
B) $61,904.
C) $122,727.
D) $135,000.
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9. Oslo Corporation has two products in its ending inventory, each accounted for at the
lower of cost or market. A profit margin of 30% on selling price is considered normal
for each product. Specific data with respect to each product follows:
Historical cost
Replacement cost
Estimated cost to dispose
Estimated selling price
Product #1
$40.00
45.00
10.00
80.00
Product #2
$ 70.00
54.00
26.00
130.00
In pricing its ending inventory using the lower-of-cost-or-market, what unit values
should Oslo use for products #1 and #2, respectively?
A) $40.00 and $65.00.
B) $46.00 and $65.00.
C) $46.00 and $60.00.
D) $45.00 and $54.00.
10. Dicer uses the conventional retail method to determine its ending inventory at cost.
Assume the beginning inventory at cost (retail) were $130,000 ($198,000), purchases
during the current year at cost (retail) were $685,000 ($1,100,000), freight-in on these
purchases totaled $43,000, sales during the current year totaled $1,050,000, and net
markups (markdowns) were $24,000 ($36,000). What is the ending inventory value at
cost?
A) $153,164.
B) $156,165.
C) $157,412.
D) $236,000.
11. On October 31, a fire destroyed PH Inc.'s entire retail inventory. The inventory on hand
as of January 1 totaled $680,000. From January 1 through the time of the fire, the
company made purchases of $165,000 and had sales of $360,000. Assuming the rate of
gross profit to selling price is 40%, what is the approximate value of the inventory that
was destroyed?
A) $680,000.
B) $673,000.
C) $485,000.
D) $629,000.
12. The sales price for a product provides a gross profit of 25% of sales price. What is the
gross profit as a percentage of cost?
A) 25%.
B) 20%.
C) 33%.
D) Not enough information is provided to determine.
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13. Boxer Inc. reported inventory at the beginning of the current year of $360,000 and at the
end of the current year of $411,000. If net sales for the current year are $2,214,600 and
the corresponding cost of sales totaled $1,879,400, what is the inventory turnover ratio
for the current year?
A) 5.74.
B) 4.57.
C) 5.39.
D) 4.88.
14. East Corporation's computation of cost of goods sold is:
Beginning inventory
Add: Cost of goods purchased
Cost of goods available for sale
Ending inventory
Cost of goods sold
$ 60,000
405,000
465,000
80,000
$385,000
The average days to sell inventory for East are
A) 56.9 days.
B) 63.1 days.
C) 66.4 days.
D) 75.8 days.
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Answer Key
1.
2.
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7.
8.
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D
C
B
D
B
D
D
A
A
A
D
C
D
C
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