5. [Retail Method.] The following information pertains to the Roberts Co: Cost o
ID: 2453920 • Letter: 5
Question
5. [Retail Method.] The following information pertains to the Roberts Co: Cost of net purchases- $70,000, cost of beginning inventory = $10,000; net purchases at retail = $130,000, beginning inventory at retail = $15,000, sales = $80,000, what is the amount of the ending inventory at retail? (Choose the closest answer) .$145000b.$65.000.saS45.000. d. $20,000 e. $30,000 6. [Retail method.] Ignore Question 5. Assume that ending inventory at retail is $40,000 and that the cost to retail ratio is 40%, what is the amount of ending inventory at cost. Choose the closest answer). a..$16.000.b $24,000 c. $40,000d $66,667Explanation / Answer
Answer:5 b. $65000
Calculation of the ending inventory at retail:
Answer:6 d. $66667
Calculation of the amount of ending inventory at cost:
=40000/(1-0.40)=$66667
Answer:7 b. Deduct the change in the LIFO reserve from COGS under LIFO to yield COGS under FIFO.
Because COGS (FIFO) = COGS (LIFO) - change in LIFO reserve
Answer:8 c. Gain of $15,000
=Sales-Cost
=100000-(130000-40000-5000 (6months dep )
=15000
Dep=130000-20000/11=10000 annual dep
Answer:9 c. $66000
Calculation of the cost of inventory on the 12/31/06 balance sheet:
=60000*1.10=$66000
Answer:10 C.$118
Calculation of the amount of ending inventory, if the company uses the LIFO method:
=11*10=110
=1*8=8
=$118
Answer:11 c. A new building that a company is building and intends to sell for a profit.
Because Qualifying assets include assets under construction for the firm's own use (such as buildings, machinery) and assets under construction for sale or lease as part of discrete projects (such as real estate projects).
Answer:12 d. Only when all three of the above conditions are met.
Because The capitalization period begins when all three of the following conditions have been met:
(1) Expenditures for the asset have been made (i.e., the firm has made cash payments or has incurred debt for construction of the asset).
(2) Necessary activities to get the asset ready for its intended use are in progress (i.e., actual construction work is taking place).
(3) Interest cost of some kind is being incurred.
The capitalization period ends when any one of these three conditions is no longer being met.
Answer:13 b. dr Merch Invty 40,000; dr. COGS 80,000; cr. Purchases 90,000; cr Merch. Invty 30,000
Beg inventory 15000 Purchases 130000 Merchandise available for sale 145000 Less: sale 80000 Ending inventory at retail 65000Related Questions
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