Question 1

Use the lower-of-cost-or-market rule to determine the value of the following inventory for Bargain Bonanza, Inc. $$\begin{array} { l l l l l l } 
\text { ITEM } & \text { QTY } & \text { COST } & \text { MKT } & \text { BASIS } & \text { AMOUNT } \
\hline \text { Mountain bikes } & 154 & \$ 598 & \$ 554 & & \
\text { Fax machines } & 133 & 163 & 212 & & \
\text { Dishwashers } & 457 & 508 & 772 & \
\text { TVs } & 491 & 196 & 252 & \
\text { VCRs } & 123 & 259 & 235 &
\end{array}$$ Total value in Inventory is:

Accepted Answer

The answer of Use the lower-of-cost-or-market rule to determine the...

Question 2

The After Five Boutique took in $825,200 in sales during May. They started the month with inventory worth $524,000 and spent $225,500 on new purchases during the month. Gross margin on sales was 30%. Using the gross profit method, estimate the cost value of the inventory at the end of June.

Accepted Answer

The answer of The After Five Boutique took in $825,200...

Question 3

The After Five Boutique took in $748,200 in sales during May. They started the month with inventory worth $419,000 and spent $154,800 on new purchases during the month. Gross margin on sales was 40%. Using the gross profit method, estimate the cost value of the inventory at the end of June.

Accepted Answer

The answer of The After Five Boutique took in $748,200...

Question 4

Quality-Value, Inc. maintains a gross margin of 75% on all of its merchandise. In September the company had a beginning inventory of $604,900, net purchases of $186,900, and net sales of $487,600. Use the gross profit method to estimate the cost of ending inventory as of September 30.

Accepted Answer

The answer of Quality-Value, Inc. maintains a gross margin of...

Question 5

Walker Manufacturing took in $206,500 in sales during October. They started the month with inventory worth $642,500 and spent $368,600 on new purchases during the month. Gross margin on sales was 66%. Using the gross profit method, estimate the cost value of the inventory at the end of October.

Accepted Answer

The answer of Walker Manufacturing took in $206,500 in sales...

Question 6

During the past year, Golden Zippers sold 631 bronze zippers. Inventory records for the year are as follows:  Using the FIFO method of inventory pricing, calculate the dollar value of the ending inventory.

Accepted Answer

The answer of During the past year, Golden Zippers sold...

Question 7

Like New Express had 400 multi-function centers machines in stock at the end of the year. Inventory records for the year are as follows:  Using the average cost method of inventory pricing calculate the dollar value of the ending inventory.

Accepted Answer

The answer of Like New Express had 400 multi-function centers...

Question 8

Tim's Sporting Goods had net sales of $1,210,540 for the year. If the beginning inventory at retail was $322,800 and the ending inventory at retail was $412,600, find the inventory turnover at retail. (Round your answer to the nearest tenth)

Accepted Answer

The inventory turnover at retail is calculated by dividing the cost of goods sold (COGS) by the average inventory at retail. First, find the average inventory: (Beginning Inventory + Ending Inventory) / 2 = ($322,800 + $412,600) / 2 = $367,700. Then, since net sales are given instead of COGS and assuming net sales approximate COGS for this calculation, the inventory turnover is: $1,210,540 / $367,700 = 3.3 times, rounded to the nearest tenth.

Question 9

During the past year, Future Diner's sold 696 dining sets. Inventory records for the year are as follows:  Using the average cost method of inventory pricing calculate the dollar value of the ending inventory.

Accepted Answer

The answer of During the past year, Future Diner's sold...

Question 10

A partial inventory of Furniture Mart is shown in the table below. Use the lower-of-cost-or-market rule to calculate the value of the inventory $$\begin{array} { l l l l l l } 
\text { Item } & \text { Quantity } & \text { Cost } & \text { Market } & \text { Basis } & \text { Amount } \
\text { Sofas } & 396 & \$ 1,150 & \$ 1,092 & & \
\text { Beds } & 173 & 7,140 & 5,712 & & \
\text { End tables } & 441 & 5,264 & 6,496 & \
\text { China cabinets } & 497 & 4,797 & 4,290 & & \
\text { Dining sets } & 315 & 2,604 & 2,520 & \
\hline
\end{array}$$

Accepted Answer

The lower-of-cost-or-market rule requires that inventory be reported at the lower of its historical cost or its current market value. Calculating the inventory value:- Sofas: 396 units * $1,092 (market value, since it's lower than cost) = $432,312- Beds: 173 units * $5,712 (market value, since it's lower than cost) = $988,176- End tables: 441 units * $5,264 (cost, since it's lower than market value) = $2,321,424- China cabinets: 497 units * $4,290 (market value, since it's lower than cost) = $2,132,130- Dining sets: 315 units * $2,520 (market value, since it's lower than cost) = $793,800Adding these values together: $432,312 + $988,176 + $2,321,424 + $2,132,130 + $793,800 = $6,667,842. The closest answer provided is $6,667,962, which seems to be a slight miscalculation. However, based on the choices given and the method used, B would be considered the correct answer despite the minor discrepancy in calculation.

Question 11

Best Price Retailers had sales of $497,100 in the month of January. Use the retail method to estimate the value of the inventory as of January 31 given the following financial information: (Round cost ratio to four decimal places) $\begin{array}{llcc}
  \text { Sticker Price Retailer's } &  \
 \text {Financial Highlights  } &\
 \text {Januare 1 - January 31  } &\
\end{array}$
$\begin{array}{|lll|} 
\hline  & \text { Cost } & \text { Retail } \
\hline \text { Beginning Inventory } & \$ 229,276 & \$ 315,500 \
\text { Net Purchases (January) } & 362,161 & 451,800 \
\text { Total avalable for sale } & & \
\hline
\end{array}$

Accepted Answer

First, calculate the total available for sale at cost and retail by adding the beginning inventory to net purchases:- Cost: $229,276 + $362,161 = $591,437- Retail: $315,500 + $451,800 = $767,300Next, calculate the cost-to-retail ratio:- Cost-to-retail ratio = $591,437 / $767,300 = 0.7705 (rounded to four decimal places)Then, subtract the sales from the total available for sale at retail to find the ending inventory at retail:- Ending inventory at retail = $767,300 - $497,100 = $270,200Finally, apply the cost-to-retail ratio to the ending inventory at retail to estimate the ending inventory at cost:- Estimated ending inventory at cost = $270,200 * 0.7705 = $208,270.16

Question 12

Northern Industries had sales of $428,000 in the month of May. Use the retail method to estimate the value of the inventory as of May 31 given the following financial information: (Round cost ratio to four decimal places) $\begin{array}{llcc}
  \text { Northern Industries } &  \ 
 \text {Financial Highlights  } &\
 \text {May 1-May 31 } &\ 
\end{array}$
$\begin{array}{|lll|} 
\hline  & \text { Cost } & \text { Retail } \
\hline \text { Beginning Inventory } & \$ 434,719& \$585,100\
\text { Net Purchases (January) } & 148,9211 & 170,900 \
\text { Total avalable for sale } & & \
\hline
\end{array}$

Accepted Answer

To estimate the ending inventory using the retail method, first calculate the cost-to-retail ratio: (Cost of Beginning Inventory + Cost of Purchases) / (Retail of Beginning Inventory + Retail of Purchases) = (434,719 + 148,921) / (585,100 + 170,900) = 583,640 / 756,000 = 0.7714. Then, calculate the retail value of goods available for sale: 585,100 + 170,900 = 756,000. Subtract sales from this total to find the ending inventory at retail: 756,000 - 428,000 = 328,000. Finally, apply the cost-to-retail ratio to estimate the ending inventory at cost: 328,000 * 0.7714 = 253,216.

Question 13

Don's Dairy had sales of $275,000 in the month of March. Use the retail method to estimate the value of the inventory as of March 31 given the following financial information: (Round cost ratio to four decimal places) $\begin{array}{c}
\begin{array}{lll}
\text { { March } 1 \text { to March } 31 }\
\text { Beginning Inventory}\
\text { Net Purchases (March )}\
\text { Goods Available for Sale}\
\end{array}
\begin{array}{lll}
\text { COST } & \text { RETAIL } \
\hline \$ 220,380 & \$ 291,800 \
183,771 & 272,200 \
\hline \$ 462,080 &
\end{array}
\end{array}$

Accepted Answer

The cost ratio is calculated as the cost of goods available for sale divided by the retail value of goods available for sale: $ \frac{462,080}{564,000} = 0.8191 $. The estimated ending inventory at retail is the goods available for sale at retail minus sales: $ 564,000 - 275,000 = 289,000 $. The estimated ending inventory at cost is the ending inventory at retail multiplied by the cost ratio: $ 289,000 \times 0.8191 = 236,777.70 $.

Question 14

During the past year, Sweeter than Honey Inc. sold 920 beehives. Inventory records for the year are as follows:  Using the average cost method of inventory pricing, calculate the dollar value of the ending inventory. (Round your answer to 2 decimal places)

Accepted Answer

The answer of During the past year, Sweeter than Honey...

Question 15

Bulk Wholesalers took in $377,800 in sales during July. They started the month with inventory worth $173,800 and spent $299,900 on new purchases during the month. Gross margin on sales was 76%. Using the gross profit method, estimate the cost value of the inventory at the end of July.

Accepted Answer

The answer of Bulk Wholesalers took in $377,800 in sales...

Question 16

Use the lower-of-cost-or-market rule to determine the value of the following inventory for Instant Key's. $$\begin{array} { l l l l l l } 
\text { ITEM } & \text { QTY } & \text { COST } & \text { MKT } & \text { BASIS } & \text { AMOUNT } \
\hline \text { Door Keys } & 154 & \$ 554 & \$ 598 & & \
\text { Car Keys } & 133 & 164 & 210 & \
\text { Bike Keys } & 257 & 510 & 620 & \
\text { Safe Keys } & 491 & 279 & 240 &
\end{array}$$ Total value in Inventory is:

Accepted Answer

The lower-of-cost-or-market rule requires valuing inventory at the lower of its cost or market value. For each item, compare the cost and market value, and use the lower value for inventory valuation. Calculate the total as follows:  - Door Keys: 154 * $554 = $85,316 (Cost is lower)  - Car Keys: 133 * $164 = $21,812 (Cost is lower)  - Bike Keys: 257 * $510 = $131,070 (Cost is lower)  - Safe Keys: 491 * $240 = $117,840 (Market is lower)  Total = $85,316 + $21,812 + $131,070 + $117,840 = $356,038.

Question 17

Extra Manufacturing maintains a gross margin of 30% on all of its merchandise. In March the company had a beginning inventory of $416,800, net purchases of $201,500, and net sales of $660,200. Use the gross profit method to estimate the cost of ending inventory as of March 31.

Accepted Answer

The cost of goods sold (COGS) is 70% of net sales (100% - 30% gross margin), which is $462,140 (70% of $660,200). The cost of goods available for sale is the beginning inventory plus net purchases, totaling $618,300 ($416,800 + $201,500). The estimated ending inventory is the cost of goods available for sale minus COGS, which is $156,160 ($618,300 - $462,140).

Question 18

The College Book Store had sales of $285,300 in the month of October. Use the retail method to estimate the value of the inventory as of October 31 given the following financial information: (Round cost ratio to four decimal places) $\begin{array}{c}
\begin{array}{lll}
\text { October 1 to October 31}\
\text { Beginning Inventory}\
\text { Net Purchases (October)}\
\text { Goods Available for Sale}\
\end{array}
\begin{array}{lll}
\text { COST } & \text { RETAIL } \
\hline \$ 221,708 & \$ 331,800 \
183,771 & 271,100 \
\hline \$ 405,479 &
\end{array}
\end{array}$

Accepted Answer

To estimate the ending inventory using the retail method, first calculate the cost-to-retail ratio: Cost of Goods Available for Sale ($405,479) / Retail Value of Goods Available for Sale ($331,800 + $271,100) = 0.6487. Then, calculate the ending inventory at retail: Goods Available for Sale at Retail ($602,900) - Sales ($285,300) = $317,600. Finally, apply the cost-to-retail ratio to the ending inventory at retail: $317,600 * 0.6487 = $213,586.00.

Question 19

Save-Mor Merchandisers had net sales of $422,300 for the year. If the beginning inventory at retail was $250,900 and the ending inventory at retail was $171,400, find the inventory turnover at retail. (Round your answer to the nearest tenth)

Accepted Answer

The inventory turnover at retail is calculated by dividing the cost of goods sold (COGS) by the average inventory at retail. First, find the COGS by subtracting the ending inventory from the sum of the beginning inventory and net sales: $250,900 (beginning inventory) + $422,300 (net sales) - $171,400 (ending inventory) = $501,800 (COGS). Then, calculate the average inventory: ($250,900 + $171,400) / 2 = $211,150. Finally, divide the COGS by the average inventory: $501,800 / $211,150 = 2.38, which rounds to 2.0 times.

Question 20

Find the value of the following inventory for TV City Inc. using the lower-of-cost-or-market rule. $$\begin{array} { l l l l l l } 
\text { Item } & \text { Quantity } & \text { Cost } & \text { Market } & \text { Basis } & \text { Amount } \
\text { Portables } & 202 & \$ 2,611 & \$ 2,684 & & \
\text { Combo HD Players } & 203 & 1,784 & 1,682 & \
\text { Projection } & 318 & 1,356 & 1,212 & \
\text { High-definition } & 216 & 1,339 & 1,157 & \
\text { Plasma } & 360 & 1,416 & 936 & \
\hline
\end{array}$$

Accepted Answer

The lower-of-cost-or-market rule requires valuing inventory at the lower of its historical cost or current market value. Calculating for each item: Portables (cost), Combo HD Players (market), Projection (market), High-definition (market), Plasma (market). Total: $1,841,156.

Quiz 16: Inventory

The After Five Boutique took in $825,200 in sales during May. They started the month with inventory worth $524,000 and spent $225,500 on new purchases during the month. Gross margin on sales was 30%. Using the gross profit method, estimate the cost value of the inventory at the end of June.

The After Five Boutique took in $748,200 in sales during May. They started the month with inventory worth $419,000 and spent $154,800 on new purchases during the month. Gross margin on sales was 40%. Using the gross profit method, estimate the cost value of the inventory at the end of June.

Quality-Value, Inc. maintains a gross margin of 75% on all of its merchandise. In September the company had a beginning inventory of $604,900, net purchases of $186,900, and net sales of $487,600. Use the gross profit method to estimate the cost of ending inventory as of September 30.

Walker Manufacturing took in $206,500 in sales during October. They started the month with inventory worth $642,500 and spent $368,600 on new purchases during the month. Gross margin on sales was 66%. Using the gross profit method, estimate the cost value of the inventory at the end of October.

During the past year, Golden Zippers sold 631 bronze zippers. Inventory records for the year are as follows: Using the FIFO method of inventory pricing, calculate the dollar value of the ending inventory.

Like New Express had 400 multi-function centers machines in stock at the end of the year. Inventory records for the year are as follows: Using the average cost method of inventory pricing calculate the dollar value of the ending inventory.

Tim's Sporting Goods had net sales of $1,210,540 for the year. If the beginning inventory at retail was $322,800 and the ending inventory at retail was $412,600, find the inventory turnover at retail. (Round your answer to the nearest tenth)

During the past year, Future Diner's sold 696 dining sets. Inventory records for the year are as follows: Using the average cost method of inventory pricing calculate the dollar value of the ending inventory.

During the past year, Sweeter than Honey Inc. sold 920 beehives. Inventory records for the year are as follows: Using the average cost method of inventory pricing, calculate the dollar value of the ending inventory. (Round your answer to 2 decimal places)

Bulk Wholesalers took in $377,800 in sales during July. They started the month with inventory worth $173,800 and spent $299,900 on new purchases during the month. Gross margin on sales was 76%. Using the gross profit method, estimate the cost value of the inventory at the end of July.

Extra Manufacturing maintains a gross margin of 30% on all of its merchandise. In March the company had a beginning inventory of $416,800, net purchases of $201,500, and net sales of $660,200. Use the gross profit method to estimate the cost of ending inventory as of March 31.

Save-Mor Merchandisers had net sales of $422,300 for the year. If the beginning inventory at retail was $250,900 and the ending inventory at retail was $171,400, find the inventory turnover at retail. (Round your answer to the nearest tenth)