Question

# Multiple Choice Question 110 Ivanhoe uses the conventional retail method to determine its ending inventory at...

Multiple Choice Question 110

Ivanhoe uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were \$380000 (\$584000), purchases during the current year at cost (retail) were \$1855000 (\$3100000), freight-in on these purchases totaled \$119000, sales during the current year totaled \$2800000, and net markups (markdowns) were \$62000 (\$98000). What is the ending inventory value at cost? Hint: Round intermediate calculation to 3 decimal places, e.g. 0.635 and final answer to 0 decimal places.

 \$848000.
 \$532544.
 \$555152.
 \$607276.

A machine cost \$1211000, has annual depreciation of \$195000, and has accumulated depreciation of \$952000 on December 31, 2017. On April 1, 2018, when the machine has a fair value of \$273000, it is exchanged for a machine with a fair value of \$1352000 and the proper amount of cash is paid. The exchange had commercial substance.

The gain to be recorded on the exchange is

 \$141000
 \$62750
 \$0
 \$64000

 Cost Retail Beginning Inventory 380,000 584,000 Purchases 1,855,000 3,100,000 Freight-in 119,000 Merchandise available for sale 2,354,000 3,684,000 Add: Markups 62,000 Totals 2,354,000 3,746,000 Cost of retail ratio 62.84% Less: Markdowns (98,000) Less: Net sales (2,800,000) Ending Inventory at Retail 848,000

Ending inventory at retail = 848,000

Cost to retail ratio = 62.8%

Ending inventory at cost = 848,000*62.8%

= 532,544

Therefore, Option 532,544 is correct.

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