ch6[1] - Garrison Company uses the retail method of...

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Unformatted text preview: Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory at $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost. Student Response Value Correct Answer 1. $160,000 0% 2. $80,000 3. $40,000 4. $45,000 Score: 0/1 2. Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error? Score: 0/1 3. During times of rising prices, which of the following is not an accurate statement? Score: 0/1 4. During the taking of its physical inventory on December 31, 2010, Barrys Bike Shop incorrectly counted its inventory as $270,000 instead of the correct amount of $190,000. The effect on the balance sheet and income statement would be as follows: Score: 0/1 5. The selection of an inventory costing method has no significant impact on the financial statements. Score: 1/1 6. Of the three widely used inventory costing methods (FIFO, LIFO, and average), the LIFO method of costing inventory is based on the assumption that costs are charged against revenues in the reverse order in which they were incurred. Score: 1/1 7. A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are not in the possession of the consignor. Score: 1/1 8. The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory. Score: 1/1 9. Which of the following companies would be more likely to use the specific identification inventory costing method? Score: 0/1 10. "Market," as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner. Score: 1/1 11. If the perpetual inventory system is used and a physical count disclosed a shortage, the cost of merchandise sold should be debited and the merchandise inventory account credited. Score: 1/1 12....
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This note was uploaded on 11/12/2010 for the course ACCT 48638 taught by Professor Sterns during the Fall '10 term at Riverside Community College.

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ch6[1] - Garrison Company uses the retail method of...

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