Question

1. Blossom Co. uses the conventional retail inventory method. The following information is available for the current year.

Cost Retail Beginning inventory $ 299000 $475000

Purchases 1050000 1530000

Freight-in 13500 — Employee discounts — 6700 Net markups — 47000 Net markdowns — 67000 Sales revenue — 1430000

The ending inventory at retail should be

a.$548300

b. $615300.

c. $581800

d.. $568200.

2. Sunland Corporation had the following amounts, all at retail:

Beginning inventory	$ 3000		Purchases	$139000
Purchase returns	5400		Net markups	15000
Abnormal shortage	3400		Net markdowns	2200
Sales	71000		Sales returns	1500
Employee discounts	1300		Normal shortage	2300

What is Sunland's ending inventory at retail?

a

$76300.

b

$72900.

c

$74200.

d

$75500.

3.Given below are the present value factors for $1.00 discounted at 7% for one to five periods. Interest is compounded annually at 7%.

	Periods	Present Value of $1 Discounted at 7% per Period
	1	0.935
	2	0.873
	3	0.816
	4	0.763
	5	0.713

What amount should an individual have in a bank account today before withdrawal if $7000 is needed each year for four years with the first withdrawal to be made today and each subsequent withdrawal at one-year intervals? (The balance in the bank account should be zero after the fourth withdrawal.)

a	($7000 × 0.935) + ($7000 × 0.873) + ($7000 × 0.816) + ($7000 × 0.763)

b	$7000 + ($7000 × 0.935) + ($7000 × 0.873) + ($7000 × 0.816)

c	$7000 ÷ 0.935 × 4

d	$7000 ÷ 0.763 × 4

Answer 1

Q1: Option A is correct

Blassom Co. Retail Inventory method
		Retail ($)
Beginning inventory (A)		475000
Purchase (B)		1530000
Net markups ©		47000
Total (A+B+C)		2052000
Deduct:
Net markdowns		67000
sales		1430000
Employee discounts		6700
total retail value of inventory		548300

Q 2 : Option b is correct

	Sunland Corporation Retail Inventory
	particular	Retail $
	Beginning inventory	3000
Add:	Purchase	139000
Less:	Purchase return	5400
Add:	net markup	15000
Less:	Sales	71000
Add:	sales return	1500
Less:	normal shortage	2300
Less:	Abnormal shortage	3400
Less:	Employee discounts	1300
Less:	Net markdowns	2200
	total inventory retail value	72900

Q 3: option a is correct

year	withdrawal(A)	npv of $1 @7% (B)	A*B
1	7000	1	7000
2	7000	0.935	6545
2	7000	0.873	5712
4	7000	0.816	5712
		Total	24969