Question

Misty Mountain Outfitters is a merchandiser of specialized fly fishing gear. Its cost of goods sold for 2016 was $722,100, and sales were $1,176,200. The amount of merchandise on hand was $174,000, and total assets amounted to $1,221,450. Using this information, which of the following answers correctly states the average days in inventory ratio? Round to the nearest day. (Do not round your intermediate calculations.)

52 days

140 days

88 days

54 days

Lott Co. had one unit in beginning inventory that cost $5. Lott paid cash to purchase two additional inventory items. The first item was purchased at a cost $6, and the second cost $7. Lott Co. sold two inventory items for $10 each, receiving cash. Based on this information alone, indicate whether the following statement is true or false. Cash flow from operating activities would be $2 assuming a FIFO cost flow was used.

True

False

Indicate whether the following statement is true or false. Under the FIFO method, each time units are sold the unit cost contained in the most recent layer is applied to the number of units sold.

True

False

For a company that uses the allowance method, the write-off of an uncollectible account receivable is an asset use transaction.

True

False

Indicate whether the following statement is true or false. A patent is amortized on a double-declining-balance basis, thus providing some tax relief in the early years.

True

False

Answer 1

Average days in inventory ratio (365 days X Merchandise inventory) Cost of goods sold -(365 days x S174,000) S722,100 87.95 or 88 days Hence, the correct option is '88 days'.