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Exam 9: Inventories: Additional Issues

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Question 21

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

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Question 22

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Trask Inc.uses the average cost retail method to estimate its ending inventory.Partial information at June 30,2016,is as follows: Required: Assuming Trask's cost-to-retail = 60%,compute Trask's beginning inventory at retail.

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Question 23

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Cindy Lou Linens uses the conventional retail method to estimate its ending inventories.The company records sales net of employee discounts.The following partial data has been summarized for the year ended December 31,2016: Required: Compute the net markups for Cindy Lou Linens during 2016.

What should be the reported value of Sullivan's inventory?

Murdock Industries uses a periodic inventory system and the LIFO retail method to estimate its ending inventories.The following data has been summarized for December 31,2016: Required: Estimate the LIFO cost of ending inventory.Assume stable retail prices during the period.

For a purchase commitment extending beyond the current fiscal year,if the market price on the purchase date declines from the previous year-end price,the purchase is recorded at the market price.

In applying the lower of cost and net realizable value rule,the inventory of apparel would be valued at:

Ramsgate Company has used the FIFO method for inventory valuation since it began business in 2012,but has elected to change to the average cost method starting in 2015.Year-end inventory valuations under each method are shown below: Required: How,and when,would Ramsgate reflect the change in accounting principle in its financial statements (ignore income taxes)?

Net realizable value is selling price less costs of completion,disposal,and transportation.

Coastal Shores Inc.(CSI) was destroyed by Hurricane Fred on August 5,2016.At January 1,CSI reported an inventory of $170,000.Sales from January 1,2016,to August 5,2016,totaled $480,000 and purchases totaled $195,000 during that time.CSI consistently marks up its products 60% over cost to arrive at a selling price.The estimated inventory loss due to Hurricane Fred would be:

Hawkeye Auto Parts uses the average cost retail method to estimate inventories.Data for the first six months of 2016 include: beginning inventory at cost and retail were $55,000 and $100,000,net purchases at cost and retail were $785,000 and $1,300,000,and sales during the first six months totaled $800,000.The estimated inventory at June 30,2016,would be:

When changing from the average cost method to FIFO,the current year's income includes the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years.

An inventory written down due to the lower of cost and net realizable value may be written back up if market value increases.

The conventional cost-to-retail percentage (rounded) is:

New York Sales Inc.uses the conventional retail method to estimate its ending inventories.The following data has been summarized for December 31,2016: Required: Compute the cost-to-retail percentage used by New York Sales Inc.

To the nearest thousand,the estimated ending inventory at cost is (round cost-to-retail ratio to whole percentage) :

Under the retail method,the denominator in the cost-to-retail percentage does not include:

The numerator for the current period's cost-to-retail percentage is:

Under the dollar-value LIFO retail method,to determine if the increase in the value of inventory was due to an increase in quantities:

Manila Bread Company uses the average cost retail method to estimate its ending inventories.The following data has been summarized for the year 2016: Required: Estimate the ending inventory as of December 31,2016.