Damaged merchandise that can be sold only at prices below cost should be valued at

Damaged merchandise that can be sold only at prices below cost should be valued at

	a.	LIFO
	b.	average cost
	c.	net realizable value
	d.	FIFO

Answer = c

Garrison Company uses the retail method of inventory costing.  It started the year with an inventory that had a retail cost of $45,000.  During the year, Garrison purchased an inventory with a retail sales value of $300,000.  After performing a physical inventory, Garrison calculated the inventory at retail to be $80,000.  The mark up is 100% of cost.  Determine the ending inventory at its estimated cost.

	a.	$160,000
	b.	$80,000
	c.	$40,000
	d.	$45,000

Answer = c

The primary objectives of control over inventory are

	a.	safeguarding inventory from damage and reporting inventory in the financial statements
	b.	maintaining constant observation of the inventory and reporting inventory in the financial statements
	c.	safeguarding the inventory from damage and maintaining constant observation of the inventory
	d.	reporting inventory in the financial statements

Answer = a

For the year ended December 31, Depot Max’s cost of merchandise sold was $56,900.  Inventory at the beginning of the year was $6,540.  Ending inventory was $7,250.  Compute Depot Max’s inventory turnover for the year.

	a.	44.0
	b.	7.8
	c.	8.3
	d.	8.7

Answer = c

Control of inventory should begin as soon as the inventory is received.  Which of the following internal control steps is not done to meet this goal?

	a.	check the invoice extensions and totals
	b.	check the invoice with the person who specifically purchased the item
	c.	check the invoice to the receiving report
	d.	check the invoice to the purchase order

Answer = b