PageOut® Assessment

Ch. 18 Quiz

Instructions
Ch.18 Quiz

This assessment is worth 100 points.

A perpetual inventory system continually updates inventory records.
   (5 points)

   True

   False
In the specific identification method the flow of goods and flow of cost are not the same.
   (5 points)

   True

   False
Weighted average unit cost is total cost of goods available for sale divided by beginning number of units available for sale.
   (5 points)

   True

   False
Under certain circumstances ending inventory could be valued at less than cost.
   (5 points)

   True

   False
To use the retail method of estimating ending inventory the figure for net sales at retail must be known.
   (5 points)

   True

   False
Inventory turnover at cost is net sales divided by average inventory at retail.
   (5 points)

   True

   False

During inflation the best method to use in inventory valuation that produces the least amount of profit is:
(5 points)

a.		LIFO
b.		FIFO
c.		Specific invoice
d.		Weighted-average
e.		None of the above

Inventory turnover at retail is equal to net sales divided by:
(5 points)

a.		Beginning inventory at retail
b.		Average inventory at retail
c.		Beginning inventory at cost
d.		Average inventory at cost
e.		None of the above

Given: Net sales $35,000, beginning inventory at retail $12,000, ending inventory at retail $16,000, cost of goods sold $18,500. The inventory turnover at retail is:
(5 points)

a.		2.9
b.		2.5
c.		1.3
d.		1.2
e.		None of the above

Overhead expenses are:
(5 points)

a.		Directly related to a specific department
b.		Directly related to a specific product
c.		Contributing directly to running of a business
d.		Contributing indirectly to running of a business
e.		None of the above

Jones Co. uses the retail inventory method. Given the following the ending inventory at cost is: Sales at retail $70,000, Net purchases at cost $39,500, Net purchases at retail $65,500, Beginning inventory at cost $20,500, beginning inventory at retail $34,500.
(5 points)

a.		$30,000
b.		$18,000
c.		$60,000
d.		$12,000
e.		None of the above

Melissa's Dress Shop inventory at cost on January 1 was $19,400. Its retail value was $36,000. During the year additional net purchases at a cost of $42,600 was brought in. Its retail value was $64,000. The net sales for the year was $70,000. Melissa's inventory at cost by the retail method is:
(5 points)

a.		$30,000
b.		$18,600
c.		$18,000
d.		$12,400
e.		None of the above

Calculate Cost of Ending Inventory using the Retail Method

Cost
Retail Price
Beginning Inventory
$ 60,000
$ 102,000
Purchases during the year
$ 25,000
40,000
Sales for Year
$ 60,000
(Round cost ratio to nearest hundredth percent)

(4 points)

(* 4000 character limit)
Calculate Inventory Turnover at cost (to nearest tenth)
Ending Inventory
$ 35,000
Beginning Inventory
$ 25,000
Cost of goods sold
$ 42,000
Net Sales
$ 5,800

(4 points)

(* 4000 character limit)
Bob's Clothing Shop inventory at cost on January 1 was $30,000. Its retail value is $42,000. During the year, Bob's Clothing Shop purchased additional merchandise at a cost of $196,000 with a retail value of $368,000. The net sales at retail for the year was $310,000. Calculate Bob's inventory at cost by the retail method. Round cost ratio to the nearest whole percent.
(4 points)

(* 4000 character limit)
Blue Company on January 1 had inventory costing $65,000 and during January had net purchases of
$119,000. Over recent years, Blue's gross profit has averaged 40% on sales. Given that the company
has net sales of $190,000, calculate the estimated cost of ending inventory using the gross profit method.
(4 points)

(* 4000 character limit)
Units
Unit Cost
Dollar Cost
Beg. Inventory
Jan. 1
10
$ 7.00
A

Apr. 11
30
$12.00
B

May 17
40
$13.00
C

Dec. 5
20
$15.00
D
A. ______________
B. ______________
C. ______________
D. ______________
20 units not sold

Calculate:

LIFO
FIFO
Weighted-Average
Cost of ending inventory
A
C
E
Cost of goods sold
B
D
F

(4 points)

(* 4000 character limit)
Cost
Retail Price
Beginning inventory
$80,000
$120,000
Purchases during the year
42,000
57,000
Sales for year
73,000
(Round cost ratio to nearest thousandth)

(4 points)

(* 4000 character limit)
Calculate Inventory turnover at cost (to nearest hundredth).
Ending inventory
$25,000
Beginning inventory
$15,000
Cost of goods sold
$43,000
Net sales
$55,800

(4 points)

(* 4000 character limit)
Calculate estimated cost of ending inventory using the gross profit method.
Gross profit on sales
35%
Beg. inventory June 1, 2001
$22,000
Net purchases
6,600
Net sales at retail for June
12,000

(4 points)

(* 4000 character limit)
Jane and Bill Co. started with a beginning inventory of $90,000. ending inventory was $110,000. Cost of goods was $260,000. Complete the inventory turnover at cost for Jane and Bill Co. (to nearest tenth).
(4 points)

(* 4000 character limit)
Moore Co. has a beginning inventory at a cost of $50,000 and en ending inventory at a cost of $90,000. Sales were $150,000. Assume Moore's markup rate is 40%. Based on the selling price, what is the inventory turnover at cost? (Round to nearest hundredth.)
(4 points)

(* 4000 character limit)

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