[17] The following information is available for the Silver Company for the 3 months ended March 31 of this year:

Merchandise inventory, January 1 of this year Purchases Freight-in

Sales

$ 900,000 3,400,000 200,000 4,800,000

The gross margin recorded was 25% of sales. What should be the merchandise inventory at March 31?

A. $700,000 B. $900,000 C. $1,125,000 D. $1,200,000

[18] A store uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes. Past experience indicates that the average gross profit rate is 25% of sales. The following data relate to the month of March:

Inventory cost, March 1 Purchases during the month at cost Sales Sales returns

$25,000 67,000 84,000

3,000 Using the data above, what is the estimated ending inventory at March 31?

A. $20,250 B. $21,000 C. $29,000 D. $31,250

2019 Gleim Publications Inc. Inventory 0219 5

[19] Finland Co. prepares monthly income statements. A physical inventory is taken only at year end; hence, month-end inventories must be estimated. All sales are made on account. The rate of markup on cost is 50%. The following information relates to the month of June:

Accounts receivable, June 1

Accounts receivable, June 30 Collection of accounts receivable during

June Inventory, June 1 Purchases of inventory during June

The estimated cost of the June 30 inventory is

A. $24,000 B. $28,000 C. $38,000 D. $44,000

$20,000 30,000

50,000 36,000 32,000

[20] Dart Companys accounting records indicated the following information:

Beginning inventory Purchases during the year Sales during the year

$ 500,000 2,500,000 3,200,000

A physical inventory taken at year end resulted in an ending inventory of $575,000. Darts gross profit on sales has remained constant at 25% in recent years. Dart suspects some inventory may have been taken by a new employee. At the balance sheet date, what is the estimated cost of missing inventory?

A. $25,000 B. $100,000 C. $175,000 D. $225,000

[21] A firm experienced a flood loss in the current year that destroyed all but $6,000 of inventory (at cost). Data available are below:

Sales Purchases

Cost of goods sold Ending inventory

Prior Year

$100,000 70,000 60,000

Current (to Date of Flood)

$40,000 35,000

10,000 What is the approximate inventory lost?

A. $10,000 B. $15,000 C. $16,000 D. $21,000

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[22] A flash flood swept through Hat, Inc.s warehouse on May 1. After the flood, Hats accounting records showed the following:

Inventory, January 1 Purchases, January 1 through May 1 Sales, January 1 through May 1 Inventory not damaged by flood Gross profit percentage on sales

$ 35,000 200,000 250,000

30,000 40%

What amount of inventory was lost in the flood?

A. $55,000 B. $85,000 C. $120,000 D. $150,000