Question
1/ Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below: Cost Retail
1/ Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below:
Cost | Retail | |||||
Beginning inventory | $ | 48,000 | $ | 65,000 | ||
Net purchases | 156,000 | 219,000 | ||||
Net markups | 20,000 | |||||
Net markdowns | 37,000 | |||||
Net sales | 222,000 | |||||
The conventional cost-to-retail percentage (rounded) is:
Multiple Choice
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71.8%.
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84.3%.
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76.4%.
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67.1%.
2/As of December 31, 2018, Amy Jo's Appliances had unadjusted account balances in accounts receivable of $305,000 and $930 in the allowance for uncollectible accounts, following 2018 write-offs of $6,390 in bad debts. An analysis of Amy Jo's December 31, 2018, accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. Bad debt expense for 2018 should be:
Multiple Choice
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$6,390.
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$6,100.
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$5,170.
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None of these answer choices are correct.
3/ Nu Company reported the following pretax data for its first year of operations.
Net sales | 2,970 | ||
Cost of goods available for sale | 2,380 | ||
Operating expenses | 800 | ||
Effective tax rate | 30 | % | |
Ending inventories: | |||
If LIFO is elected | 940 | ||
If FIFO is elected | 1,080 | ||
What is Nu's gross profit ratio if it elects LIFO? (Round your answer to the nearest whole percentage.)
Multiple Choice
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61%.
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21%.
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52%.
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56%.
4/ Bond Company adopted the dollar-value LIFO inventory method on January 1, 2018. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:
Ending Inventory | |||||||||||
Year | At Current Cost | At Base Year Cost | Cost Index | ||||||||
1/1/2018 | $ | 306,000 | $ | 306,000 | 1.00 | ||||||
12/31/2018 | 339,560 | 326,500 | 1.04 | ||||||||
12/31/2019 | 433,100 | 355,000 | 1.22 | ||||||||
Under the dollar-value LIFO method, the inventory at December 31, 2019, should be
Multiple Choice
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$362,090.
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$355,000.
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$355,820.
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None of these answer choices are correct.
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