Question Details

Merchandise purchases for July are anticipated to be 



1.	RS Corporation, a manufacturer of ethnic foods, contracted in 2010 to purchase 500 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2011. By 12/31/10, the price per pound of the spice mixture had risen to $5.60 per pound. In 2010, AJ should recognize
a.	a loss of $2,500.
b.	a loss of $300.
c.	no gain or loss.
d.	a gain of $300.

	2.	LF Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2011. By 12/31/10, the price per pound of the spice mixture had dropped to $4.60 per pound. In 2010, LF should recognize
a	a loss of $5,000.
b.	a loss of $400.
c.	no gain or loss.
d.	a gain of $400.

	3.	The following information is available for October for Barton Company.
Beginning inventory	$  50,000
Net purchases	150,000
Net sales	300,000
Percentage markup on cost	 66.67%
A fire destroyed Barton- October 31 inventory, leaving undamaged inventory with a cost of $3,000. Using the gross profit method, the estimated ending inventory destroyed by fire is
a.	$17,000.
b.	$77,000.
c.	$80,000.
d.	$100,000.

4.	The following information is available for October for Norton Company.
Beginning inventory	$100,000
Net purchases	300,000
Net sales	600,000
Percentage markup on cost	66.67%
A fire destroyed Norton- October 31 inventory, leaving undamaged inventory with a cost of $6,000. Using the gross profit method, the estimated ending inventory destroyed by fire is
a.	$34,000.
b.	$154,000.
c.	$160,000.
d.	$200,000.

Use the following information for questions 5 and 6.
Miles Company, a wholesaler, budgeted the following sales for the indicated months:
			     June		      July		    August	
	Sales on account	$1,800,000	$1,840,000	$1,900,000
	Cash sales	     180,000	     200,000	     260,000
	Total sales	$1,980,000	$2,040,000	$2,160,000

All merchandise is marked up to sell at its invoice cost plus 20%. Merchandise inventories at the beginning of each month are at 30% of that month's projected cost of goods sold.

	5.	The cost of goods sold for the month of June is anticipated to be
a.	$1,440,000.
b.	$1,500,000.
c.	$1,520,000.
d.	$1,650,000.

	6.	Merchandise purchases for July are anticipated to be 
a.	$1,632,000.
b.	$2,076,000.
c.	$1,700,000.
d.	$1,730,000.




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