Question 1

Madison Co. has determined its year-end inventory on a LIFO basis to be $609,000. Information pertaining to that inventory is as follows:

Selling price $ 729,000

Costs to sell 34,000

Normal profit margin 84,000

Replacement cost 629,000

What should be the reported value of Madison's inventory?

A) $609,000

B) $629,000

C) $694,000

D) $610,000

Question 2

Coastal Shores Inc. (CSI) was destroyed by Hurricane Fred on August 5, 2016. At January 1, CSI reported an inventory of $184,000. Sales from January 1, 2016, to August 5, 2016, totaled $494,000 and purchases totaled $209,000 during that time. CSI consistently marks up its products 60% of Sales. The estimated inventory loss due to Hurricane Fred would be:

A) $139,575

B) $84,250

C) $88,250

D) None of these answer choices are correct.

Question 3

A company using the conventional retail method has the following information for the current year's operations

Beginning inventory: $100,000(Cost) $150,000(Retail)

Purchases : 500,000(Cost) 800,000(Retail)

Net Markups: 85,000(Retail)

Net Markdowns: 35,000(Retail)

Net sales: 750,000(Retail)

Management calculates the cost-to-retail percentage as 60%, equal to cost of $600,000 ($100,000 + $500,000) divided by retail of $1,000,000 ($150,000 + $800,000 + $85,000 - $35,000). Which of the following statements is correct?

A.) The cost-to-retail percentage should be calculated as cost of $600,000 divided by retail of $750,000 (Net sales).

B.) The retail amount should be $1,035,000 excluding net markdowns.

C.) The cost and retail amounts should not include beginning inventory of $ 100,000 and $150,000 respectively.

D.) The retail amount should be $950,000 excluding net markups and net markdowns.