Exam 9: Inventories: Additional Valuation Issues

The following information is available for October for Barton Company. A fire destroyed Barton's October 31 inventory, leaving undamaged inventory with a cost of $15,000. Using the gross profit method, the estimated ending inventory destroyed by fire is

Use the following information for questions 125 through 129. Plank Co. uses the retail inventory method. The following information is available for the current year. -The approximate cost of the ending inventory by the conventional retail method is

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available: The amount of the inventory loss is estimated to be

All of the following are key differences between U.S. GAAP and IFRS with respect to accounting for inventories except the

Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating to the computation of the inventory at July 31, 2014, are as follows: Under the lower-of-cost-or-market method, Henke's estimated inventory at July 31, 2014 is

A disadvantage of the gross profit method is that it uses past percentages in determining the markup.

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

The reason for eliminating the price change in inventory is:

When calculating the cost ratio for the retail inventory method,

In hedging, the purchaser in the purchase commitment simultaneously enters into a contract in which it agrees to sell in the future:

Gamma Ray Corp. has annual sales totaling $780,000 and an average gross profit of 20% of cost. What is the dollar amount of the gross profit?

Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year: If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost-to-retail ratio?

Kesler, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 25%. The following account balances are available: The estimate of the cost of inventory at March 31 would be

Confectioners, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $1,500 and received 8,500 pieces of candy that are allocated among three groups. Group 1 consists of 2,500 pieces that are expected to sell for $0.15 each. Group 2 consists of 5,500 pieces that are expected to sell for $0.36 each. Group 3 consists of 500 pieces that are expected to sell for $0.72 each. Using the relative sales value method, what is the cost per item in Group 2?

The following information relates to Moore Company's inventory:Cost of inventory = $460Selling price of inventory = $500Normal profit margin = 10% of selling priceCurrent replacement cost = $370Cost of completion and disposal = $50Under IFRS, which of the following would be the correct measurement value for the inventory?

The LIFO retail method assumes that markups and markdowns apply only to the goods purchased during the period.

If the contract price on a noncancelable purchase commitment exceeds the market price, the buyer should record any expected losses on the commitment in the period in which the market decline takes place.

Gross profit method. On January 1, a store had inventory of $48,000. January purchases were $46,000 and January sales were $90,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 25% of cost. Merchandise with a selling price of $7,500 remained undamaged after the fire. Compute the amount of the fire loss, assuming the store had no insurance coverage. Label all figures.

Use the following information for questions 125 through 129. Plank Co. uses the retail inventory method. The following information is available for the current year. -If the ending inventory is to be valued at approximately lower of average cost or market, the calculation of the cost ratio should be based on cost and retail of

In 2014, Orear Manufacturing signed a contract with a supplier to purchase raw materials in 2015 for $700,000. Before the December 31, 2014 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2014 will result in a credit that should be reported