Deck 21: Appendix D: Retail Inventory Method

Question 1

Flynn Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year:
If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost to retail ratio?

A) $177,500 ÷ $250,000
B) $177,500 ÷ $258,500
C) $175,000 ÷ $260,000
D) $177,500 ÷ $248,500

Answer 1

$177,500 ÷ $258,500

Question 2

The following data concerning the retail inventory method are taken from the financial records of Stone Company.


-The ending inventory at retail should be

A) $74,000.
B) $60,000.
C) $64,000.
D) $42,000.

Answer 2

$60,000.

Question 3

Trent Co. uses the retail inventory method. The following information is available for the current year.


-If the ending inventory is to be valued at approximately lower of average cost or market, the calculation of the cost ratio should be based on cost and retail of

A) $300,000 and $430,000.
B) $300,000 and $428,000.
C) $373,000 and $550,000.
D) $378,000 and $552,000.

Answer 3

$378,000 and $552,000.

Question 4

Trent Co. uses the retail inventory method. The following information is available for the current year.


-The ending inventory at retail should be

A) $160,000.
B) $150,000.
C) $144,000.
D) $140,000.

Question 5

Trent Co. uses the retail inventory method. The following information is available for the current year.


-The approximate cost of the ending inventory by the conventional retail method is

A) $95,900.
B) $94,920.
C) $98,000.
D) $102,480.

Question 6

At December 31, 2008, the following information was available from Goff Co.'s accounting records:
Sales for the year totaled $1,050,000. Markdowns amounted to $ 10,000. Under the lower-of-cost-or-market method, Goff's inventory at December 31, 2008 was

A) $294,000.
B) $245,000.
C) $252,000.
D) $238,000.