Practice Exam 3
Practice Exam Chapters 9-12 1. Montana Co. has determined its year-end inventory on a FIFO basis to be $600,000. Information pertaining to that inventory is as follows: What should be the carrying value of Montana 's inventory?
A. $600,000.
B. $520,000.
C. $590,000.
D. $510,000.
2. On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available: What is the estimated inventory on July 8 immediately prior to the fire?
A. $192,000
B. $490,000
C. $510,000
D. $280,000
3. The conventional retail inventory method is based on: A. Average cost B. LIFO cost C. Average, lower of cost or market D. LIFO, lower of cost or market
4. Lacy 's Linen Mart uses the retail method approximating average cost to estimate inventories. Data for the first six months of 2011 include: beginning inventory at cost and retail were $60,000 and $120,000, net purchases at cost and retail were $312,000 and $480,000, and sales during the first six months totaled $490,000. The estimated inventory at June 30, 2011, would be:
A. $68,200.
B. $55,000.
C. $71,500.
D. $63,250.
5. A company using the periodic inventory method correctly recorded a December 29 purchase of merchandise, but the merchandise was not included in the physical inventory count on December 31 (end of the accounting period). The error caused an: A. Understatement of inventory, purchases, and accounts payable B. Overstatement of both income and assets by the same amount C. Understatement of both income and assets by the same amount D. Overstatement of inventory, purchases, and accounts payable
6. Grab Manufacturing Co. purchased a ten-ton draw press at a cost of $171,000. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was
A. $600,000.
B. $520,000.
C. $590,000.
D. $510,000.
2. On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available: What is the estimated inventory on July 8 immediately prior to the fire?
A. $192,000
B. $490,000
C. $510,000
D. $280,000
3. The conventional retail inventory method is based on: A. Average cost B. LIFO cost C. Average, lower of cost or market D. LIFO, lower of cost or market
4. Lacy 's Linen Mart uses the retail method approximating average cost to estimate inventories. Data for the first six months of 2011 include: beginning inventory at cost and retail were $60,000 and $120,000, net purchases at cost and retail were $312,000 and $480,000, and sales during the first six months totaled $490,000. The estimated inventory at June 30, 2011, would be:
A. $68,200.
B. $55,000.
C. $71,500.
D. $63,250.
5. A company using the periodic inventory method correctly recorded a December 29 purchase of merchandise, but the merchandise was not included in the physical inventory count on December 31 (end of the accounting period). The error caused an: A. Understatement of inventory, purchases, and accounts payable B. Overstatement of both income and assets by the same amount C. Understatement of both income and assets by the same amount D. Overstatement of inventory, purchases, and accounts payable
6. Grab Manufacturing Co. purchased a ten-ton draw press at a cost of $171,000. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was