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Exam 9: Inventories: Additional Issues

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Question 81

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Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below: - The conventional cost-to-retail percentage (rounded) is:

A) 82.6%.
B) 66.7%.
C) 71.9%.
D) 75.5%.

E) A) and B)
F) None of the above

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Question 82

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In the following questions, inventory errors are noted for 2018. Assume that the errors are not discovered until 2019, and that the company uses a periodic inventory system. Indicate the effect of the error, if any, on the accounts noted in the columns, using the following code: U = Understated; O = Overstated; NE = No effect - $\begin{array} { | l | l | l | } \hline { \text { Error } } & \text { Cost of goods sold } & \text { Retained earnings } \\\hline \text { Understated beginning inventory } & & \\\hline\end{array}$

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Question 83

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Under International Financial Reporting Standards (IFRS) , inventory is valued at the lower of cost and:

Data related to the inventories of Costco Medical Supply are presented below: $\begin{array} { l c c c r } & \text { Surgical } & \text { Surgical } & \text { Rehab } & \text { Rehab } \\& \text { Equiprnent } & \text { Supplies } & \text { Equipment } & \text { Supplies } \\\text { Selling price } & \$ 260 & \$ 100 & \$ 340 & \$ 165 \\\text { Cost } & 170 & 90 & 250 & 162 \\\text { Costs to sell } & 30 & 15 & 25 & 10\end{array}$ - In applying the lower of cost or net realizable value rule, the inventory of rehab supplies would be valued at:

For a purchase commitment contained within a single fiscal year, if the market price is less than the contract price, the purchase is recorded at the contract price.

On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available: What is the estimated inventory on July 8 immediately prior to the fire?

Portman Inc. uses the conventional retail inventory method. Expressed in millions of dollars, information about Portman's 2018 inventory account is expressed in the table below: What is the value of Portman's inventory at 12/31/2018?

Data related to the inventories of Mountain Ski Equipment and Supplies is presented below: - In applying the lower of cost or market rule, the inventory of apparel would be valued at:

Data below for the year ended December 31, 2018, relates to Houdini Inc. Houdini started business January 1, 2018, and uses the LIFO retail method to estimate ending inventory. - Current period cost-to-retail percentage is:

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, 2018: Required: Estimate the LIFO cost of ending inventory. Assume stable retail prices during the period.

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

Penfold's Paints uses the average cost retail method to estimate its ending inventories. The following data has been summarized for the year 2018: Required: Compute the cost-to-retail percentage used by Penfold's Paints.

Lower of cost or net realizable value can be applied to individual inventory items, to logical categories of inventory, or to the entire inventory.