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Questions and Answers
What method does Midwest Office Products use to estimate ending inventory in its monthly financial statements?
What method does Midwest Office Products use to estimate ending inventory in its monthly financial statements?
- LIFO method
- Weighted average method
- FIFO method
- Retail method (correct)
What was the cost of the inventory on May 1?
What was the cost of the inventory on May 1?
- $116,964
- $137,400 (correct)
- $150,425
- $198,000
What was the net purchases for the month ended May 31?
What was the net purchases for the month ended May 31?
- $150,425
- $204,000
- $184,800 (correct)
- $273,000
What was the cost of the May 31 inventory using the retail method?
What was the cost of the May 31 inventory using the retail method?
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Study Notes
Midwest Office Products Inventory Estimation
- The company employs the retail inventory method for estimating ending inventory in monthly financial statements.
- This method involves determining the ending inventory at retail price and then applying a cost-to-retail percentage to estimate its cost.
Inventory Cost on May 1
- The inventory cost recorded on May 1 was $60,000.
Net Purchases for May
- Total net purchases for the month ended May 31 amounted to $45,000.
Cost of May 31 Inventory
- The cost of inventory as of May 31, calculated using the retail method, is $63,000.
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