#13

On March 17, 2011, a flood destroyed the entire inventory of Jones Co. The following information is available from its accounting records. Inventory, at cost, at 1/1/15 was $2 Purchases, at cost, from 1/1/15 until the flood were $3 Sales, at sale prices, from l/l/l5 until the flood were $5 Normal gross profit based on past experience and current trend was 40% Required: Compute the estimated cost of inventory lost in the flood. If in applying the "lower cost or net realizable value" approach to inventory, you need to "write down" the inventory amount, you would credit "inventory" What account would you debit? Purchases Payables Cost of goods sold Extraordinary loss When using the perpetual inventory system, when you sell merchandise, you would record the cost of merchandise sold transaction in addition to the sales transaction True or false? The choice of inventory method rarely has a significant impact on the operating income of a business True or False? LIFO inventory pools relate to the marine life inhabitable fresh water pools managed by the "Last Identified Fish Organization" True or False