Please answer

1. Techniques for the measurement of the cost of

inventories may be used for convenience if the results

approximate cost. The following are acceptable for

year-end financial reporting purposes, except

a. Standard cost method

b. Retail method

c. Gross profit method

d. None of the above.

2. The gross profit method is useful

a. When interim financial statements are prepared.

b. When inventory is destroyed by fire or flashfloods.

c. When testing of the validity of an inventory cost

determined under either periodic or perpetual

system.

d. In all of these.

3. The use of the gross profit method assumes

a. The amount of gross profit is the same as in prior

years.

b. Sales and cost of goods sold have not changed

from previous years.

c. Inventory values have not increased from

previous years.

d. The relationship between gross profit and sales

remains stable over time.

4. The gross profit method assumes

a. The beginning inventory plus purchases equal total

goods to be accounted for.

b. Goods not sold must be on hand.

c. If sales, reduced to cost, are deducted from the

sum of the opening inventory plus purchases, the

result is the ending inventory.

d. All of these.

5. On May 6, 2020 a flash flood caused damage to the

merchandise stored in the warehouse of Cabanatuan

Co. You were asked to submit an estimate of the

merchandise destroyed in the warehouse. The

following data were established:

a. Net sales for 2019 were P800,000, matched

against cost of P560,000.

b. Merchandise inventory, Jan. 1, 2020 was

P200,000, 90% of which was in the warehouse and

10% in downtown showrooms.

c. For Jan. 1, 2020 to date of flood, you ascertained

invoice value of purchases (all stored in the

warehouse), P100,000; freight inward, P4,000;

purchases returned, P6,000.

d. Cost of merchandise transferred from the

warehouse to show-rooms was P8,000, and net

sales from January 1 to May 6, 2020 (all

warehouse stock) were P320,000.

Assuming gross profit rate in 2020 to be the same as

in the previous year, the estimated merchandise

destroyed by the flood was

a. P80,000 c. P50,000

b. P66,000 d. P46,000

6. The Bayambang Corporation was organized on January

1, 2019. On December 31, 2020, the corporation lost

most of its inventory in a warehouse fire just before

the year-end count of inventory was to take place.

Data from the records disclosed the following:

2019 2020

Goods available for sale 4,069,400 4,157,000

Sales 3,940,000 4,180,000

Sales returns and

allowances

80,000

100,000

Gross profit rate 21% ?

On January 1, 2020, the Corporation's pricing policy

was changed so that the gross profit rate would be

three percentage points higher than the one earned in

2019.

Salvaged undamaged merchandise was marked to sell

at P120,000 while damaged merchandise was marked

to sell at P80,000 had an estimated realizable value of

P18,000.

How much is the inventory loss due to fire?

a. P918,200 c. P856,200

b. P947,000 d. P824,600

9. Which statement is incorrect regarding the retail

inventory method?

a. The retail method is often used in the retail

industry for measuring inventories of large

numbers of rapidly changing items with similar

margins for which it is impracticable to use other

costing methods.

b. The cost of the inventory is determined by

reducing the sales value of the inventory by the

appropriate percentage gross margin.

c. The percentage used takes into consideration

inventory that has been marked down to below its

original selling price.

d. A percentage computed using the conventional

retail is required for each retail department.

14. In calculating the cost-to-retail percentage for the

retail method, the cost column will include:

a. Markup cancellations

b. Markdown cancellations

c. Sales returns

d. Purchase allowances

15. In calculating the cost-to-retail percentage for the

retail method, the retail column will include:

a. Sales discounts

b. Employee discounts

c. Sales allowances

d. Purchase returns

16. In calculating the cost-to-retail percentage for the

retail method, the retail column will not include:

a. Purchases

b. Purchase returns

c. Abnormal shortages

d. Freight-in

17. The records of Binmaley's Department Store report the

following data for the month of January:

Beginning inventory at cost P 440,000

Beginning inventory at sales price 800,000

Purchases at cost 4,500,000

Initial markup on purchases 2,900,000

Purchase returns at cost 240,000

Purchase returns at sales price 350,000

Freight on purchases 100,000

Additional markup 250,000

Markup cancellations 100,000

Markdown 600,000

Markdown cancellations 100,000

Net sales 6,500,000

Sales allowance 100,000

Sales returns 500,000

Employee discounts 200,000

Theft and other losses 100,000

Using the average retail inventory method, Binmaley's

ending inventory at cost is

a. P360,000 c. P420,000

b. P384,000 d. P448,000

19. The retail inventory method is characterized by

a. The recording of sales at cost.

b. The reporting of year-end inventory at retail in

the financial statements.

c. The recording of markups at retail and

markdowns at cost.

d. The recording of purchases at selling price.