Raleigh Co. has the following products in its ending inventory. Compute the lowe
ID: 2474750 • Letter: R
Question
Raleigh Co. has the following products in its ending inventory. Compute the lower of cost of market total for inventory applied separately to each product. $2,040.50. $2,086.50. $2,018.00. $2,109.00. $2,053.50. On December 31, a company needed to estimate its ending inventory to prepare its annual financial statements. The following information is currently available: Inventory as of January 1: $120,500 Net sales for the year: $400,000 Net purchases for the year: $270,500 This company typically achieves a gross profit ratio of 15%. Ending Inventory under the gross profit method would be: $102,425. $10,425. $9,000. $51,000. $51,425. Damaged and obsolete goods that can be sold: Are never counted as inventory. Are included in inventory at their full cost. Are included in inventory at their net realizable value. Should be disposed of immediately. Are assigned a value of zero. The inventory turnover ratio: Is used to analyze profitability. Is used to measure solvency. Reveals how many times a company sell its merchandise inventory during a period. Reveals how many days a company can sell inventory if no new merchandise is purchased. Calculation depends on the company's inventory valuation method. During a period of steadily rising costs, the inventory valuation method that yields the highest rep net income is: Specific identification method. Average cost method. Average cost method. Weighted-average method. FIFO method. LIFO method.Explanation / Answer
1)
2)
Cost of goods sold = Net sales - gross profit = $400000 - 15% of $400000 = $340000
Ending Inventory
= beginning inventory + purchase - cost of goods sold
= $120500 + $270500 - $340000
= $51000
3) C) are included in inventory at their net realizable value. The concept is based on the principle of valuing inventory at cost of net realizable value whichever is lower.
4) C) how many times a company sells its merchandise inventory during a period.
5) D) FIFO. The cost of goods sold in FIFO (In the event of inflation, the previous purchases from which goods will be sold will have lower price than the inflated price of last purchases) will be lower thereby increasing the profit.
Product Quantity Cost per unit Market Value LCM Total cost of inventory (LCM x Quantity) Jelly 150 2 2.15 2 300 Jam 370 2.65 2.5 2.5 925 Marmalade 260 3.1 3.05 3.05 793 Total Cost of Inventory $2018Related Questions
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