Ch08Greg - Page 1 of 10 Chapter 08 Graded Quiz 17/20...

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Page 1 of 10 Chapter 08 Graded Quiz – 17/20 Correct, 85% 10/23/2009 Points Awarded 17.00 Points Missed 3.00 Percentage 85.0%
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Page 2 of 10 Chapter 08 Graded Quiz – 17/20 Correct, 85% 10/23/2009 1.   During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net  income is: E) LIFO method. Feedback:   correct 2.   A company had the following purchases during the current year:      On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from  January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific  identification method, what is the cost of the ending inventory? B) $3,800. Feedback:  correct 3.   Days' sales in inventory: A) Is also called days' stock on hand. Feedback:   correct 4.   Generally accepted accounting principles require that the inventory of a company be reported at: A) Market value. B) Historical cost. C) Lower of cost or market. Feedback:   correct 5.   The Jackson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross  profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be: A) $60,000 Feedback:   If sales for the period were $300,000 and the company's typical gross profit ratio is 30%, gross  profit would be approximately $90,000. That means that cost of goods sold must have been $210,000.  Subtracting cost of goods sold of $210,000 from the $270,000 of cost of goods available for sale yields ending  inventory of $60,000.
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Page 3 of 10 Chapter 08 Graded Quiz – 17/20 Correct, 85% 10/23/2009 6.   Interim statements: C) Are usually monthly or quarterly statements prepared for periods less than the traditional, annual  statements. Feedback:   correct 7.   Thelma Company reported cost of goods sold for Year 1 and Year 2 as follows:      Thelma Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,000 and 2)  ending inventory at the end of Year 2 was overstated by $6,000. Given this information, the correct cost of  goods sold figure for Year 2 would be: A) $291,000 Feedback:   If ending inventory for Year 1 was reported at $130,000 but was understated by $15,000, the  correct ending inventory figure for Year 1 was $145,000. That amount becomes the beginning inventory for Year  2. Add to that amount the $275,000 of cost of goods purchased in Year 2 and you get cost of goods available  for sale of $420,000. Finally, the reported ending inventory figure for Year 2 of $135,000 was overstated by  $6,000. Thus, the correct ending inventory figure for Year 2 was $129,000. Subtracting ending inventory of 
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Ch08Greg - Page 1 of 10 Chapter 08 Graded Quiz 17/20...

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