HW #6 Solution

# HW #6 Solution - Lab Homework #6 Name_ 1. Given the...

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Lab Homework #6 Name______________________________ 1. Given the historical cost of product Z is \$80, the selling price of product Z is \$95, costs to sell product Z are \$11, the replacement cost for product Z is \$83, and the normal profit margin is 40% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison? a. \$80. Ceiling = Net Realizable Value = \$84 b. \$84. Replacement Cost = \$83 c. \$83. Floor = NRV – Normal Profit = \$46 d. \$46. 2. The following information is available for October for Barton Company. Beginning inventory \$150,000 Net purchases 450,000 Net sales 900,000 Percentage markup on cost 66.67% A fire destroyed Barton’s October 31 inventory, leaving undamaged inventory with a cost of \$9,000. Using the gross profit method, the estimated ending inventory destroyed by fire is a. \$51,000. b. \$231,000. c. \$240,000. d. \$300,000. Beginning Inventory: 150,000 Purchases 450,000 COGAS 600,000 Sales at Cost (540,000) 900,000x.60=540,000 (based on 40% markup) Ending Inventory 60,000 Less: Undamaged 9,000 Destroyed by Fire 51,000

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Plank Co. uses the retail inventory method. The following information is available for the
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## This note was uploaded on 03/20/2012 for the course ACCT 401 taught by Professor Winchel during the Spring '10 term at South Carolina.

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HW #6 Solution - Lab Homework #6 Name_ 1. Given the...

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