Each of the 25 correct answers is assigned a weight of 4%. Warren/Reeve/Duchac NOTE: Test 7A INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amounts in the Answers column For Scoring 0. Answers current assets In which section of the balance sheet is merchandise inventory reported? 0. When the inventory of merchandise can be determined only by a detailed count of the items on hand, the system is called 1. Would a perpetual inventory system normally be practical for the following types of businesses without a computerized system? (answer yes or no) 2-3. 2. 2. Retail jewelry dealer 3. Retail clothing store 4. The subsidiary ledger containing a perpetual record of each type of merchandise available for sale is called the If the cost of an item of inventory is $55, the current replacement cost is $50, and the selling price is $95, the amount included in inventory according to the lower of cost or market concept is 5. 6 6. Merchandise in transit should be included in the sellers inventory if the terms are FOB In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the account credited is The inventory method that considers the inventory to be composed of the units of merchandise acquired earest is called The method that is useful for estimating the cost of inventory that has been destroyed is During a period of consistently falling prices, the method (FIFO or LIFO) that will result in reporting the greater cost of merchandise sold is.... Inventory at the end of the current fiscal year was overstated. State whether each of the following will be overstated, understated, or 7. 8 9 0. 8. 9. 10. 11-14. not affected: Cost of merchandise sold reported on the income statement for the current year 11. 12. 12. Net income reported on the income statement for the current year 13. Owner's equity reported on the balance sheet at the end of the 13. 14 current year 14. Current assets on the balance sheet at the end of the current year 15. Damaged merchandise that can only be sold at below cost should be 15. valued at On the last day of the current year, a manufacturer delivers merchandise to a retailer on consignment. The unsold consigned merchandise would be included in the inventory of the .. 16. 6 7 17. Inventory turnover of 36 means that inventory turns over everydays PROBLEM 1-PROBLEMS-32% CTIONS: Solve the following problems and record the answers in the Answers column. An Scoring The amount credited to sales for the sale of merchandise costing $500, with 40% added to the cost price to determine selling pro, is $700 0. 1. Summarized data on sales and merchandise available for sale are as follows: April 1 April 1-30 Purchases (net) . Apnil 1-30 Sales (net) Merchandise inventory $390,000 585,000 1,100,00 If the estimated rate of gross profit is 40%, the estimated cost of the merchandise inventory on April 30 is 2. The following lots of a particular commodity were available for sale during the year Beginning inventory... First purchase Second purchase Third purchase 10 unilts at s80 40 unlis at 859 35units at $62 15 units at $63 Based on the periodic system, the total cost of the 25 units in invantory at the end of the year, according to the first-in, first-out method, is 2. 3. Based on the data in Question 2, the total cost of the 25 units in inventory 4. Based on the data in Question 2, the total cost of the 25 units in inventory 5. A purchase order for $7,000 of merchandise was mailed to a supplier by the last-in, first-out method is by the average cost method is on December 22, 2008. The merchandise was shipped by the supplier on December 29, 2008, under terms of FOB shipping point, and the merchandise was received on January 3, 2009, if 50% is added to its cost by the purchaser to determine selling price, the amount to be included in the inventory of the purchaser on December 31, 2008, i..... Beginning inventory, purchases, and sales of a commodity are presented below 6. 15 units at $46 10 units at $65 30 units at $65 40 units at $65 30 units at $48 50 units at $49 Inventory: July 1 Sales: July 6 12 Purchases: July9 18 Assuming that the perpetual inventory system is used, the cost of the inventory balance on July 31 by the FIFO method is Based on the data in Question 6, the cost of the inventory balance on July 31 by the LIFO method is . Summarized data on sales and merchandise available for sale ane as follows: 7. 8. Retail $180,000 240,000 250,000 Cost $100,000 152,000 June 1 June 1-30 June 1-30 Purchases (net) Sales (net) The estimated cost of the merchandise inventory on June 30 by the retail method is 8