24 accounting mcqs 497824
Aug 29, 2021 | Uncategorized
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9.
Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of $6,000,000. Additional information related to the project includes: costs incurred during the year were $1,400,000; estimated costs to complete as of December 31, 2013 were $2,100,000. What amount should Jot recognize as gross profit for the project in 2013?
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$700,000
$1,000,000
$1,500,000
$2,500,000
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10.
Swift Builders, Inc. uses the completed-contract method of accounting for a $450,000 contract that it expects will take two years to complete. At December 31, 2013, the end of the first year of the contract, additional information related to the project includes: costs incurred to date were $290,000; estimated costs to complete were $180,000; billings to date were $325,000; collections to date were $300,000. What amount should Swift recognize as gross profit or loss for 2013?
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$ -0-
a $20,000 loss
a $40,000 loss
a $110,000 loss
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11.
Miller Company appropriately uses the installment method of accounting to recognize income in its financial statements. Pertinent data relating to this method of accounting includes: installment sales totaled $400,000 for 2013 and $500,000 for 2014; cost of sales were $260,000 for 2013 and $300,00 for 2014; in 2013 Miller collected $280,000 from 2013 sales; in 2014 Miller collected $100,000 from 2013 sales and $300,000 from 2014 sales. What amount should Miller report as realized gross profit on the 2014 income statement?
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$155,000
$120,000
$98,000
$35,000
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12.
In a consignment sale, the consignor (Points : 6)
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does not show the merchandise as an asset on its books.
recognizes revenue only after receiving notification of sale and the cash remittance from the consignee.
recognizes revenue when it ships merchandise to the consignee.
periodically prepares an “account report” for the consignee.
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13.
If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?
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Cash in bank
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$25,700
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Cash on hand
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$620
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Post-dated checks
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$1,680
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Certificates of deposit
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$80,000
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$80,000
$28,000
$26,320
$620
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14.
At December 31, 2013, Vega Vacuum Corporation has cash in bank of 38,500, restricted cash in a separate account of $9,000, and a bank overdraft at another bank of $750. How much should it report as cash on the balance sheet?
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$38,500
$29,500
$37,750
$46,750
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15.
Which of the following is not classified as cash on the balance sheet? (Points : 6)
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Postage stamps
Post-dated checks
Cash restricted for plant expansion
All of the above
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16.Corresponds to CLO 4(d)
The month-end bank statement for Guthrie Motors shows a balance of $152,000 and a bank service charge of $40. Outstanding checks are $35,000, a deposit of $10,000 was in transit at month end, and a check for $1,500 was erroneously charged by the bank against the account. The correct balance in the bank account at month end is (Points : 6)
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$125,000
$125,460
$128,500
$128,460
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17.Corresponds to CLO 5(a)
As of December 31, Gammelguard Corporation has outstanding accounts receivable of $1.5 million. Sales on credit during the year were $9 million. The allowance for doubtful accounts has a credit balance of $20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)
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$115,000
$135,000
$155,000
$810,000
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18.Corresponds to CLO 5(b)
As of December 31, Wiliams Corporation has outstanding accounts receivable of $3.6 million. Sales on credit during the year were $12.5 million. The allowance for doubtful accounts has a credit balance of $62,000. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)
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$63,000
$125,000
$187,000
$360,000
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19.Corresponds to CLO 5(c)
Kandris Corporation had a balance in accounts receivable of $450,000 and a balance in allowance for doubtful accounts of $34,000, when management decided the accounts receivable from Dunn Corporation of $1,800 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account? (Points : 6)
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Debit Allowance for Doubtful Accounts, credit Accounts Receivable, $1,800
Debit Allowance for Doubtful Accounts, credit Bad Debt Expense, $1,800
Debit Bad Debt Expense, credit Allowance for Doubtful Accounts, $1,800
Debit Accounts Receivable, credit Allowance for Doubtful Accounts, $1,800
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20.Corresponds to CLO 5(d)
At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of $850,000 and $79,000 respectively. An aging of accounts receivable indicated that $88,000 of December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is (Points : 6)
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$938,000
$929,000
$771,000
$762,000
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21.Corresponds to CLO 6(a)
The following is a record of Axis Corporation’s inventory transactions for the current month:
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June 1
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Balance, 300 units @ $65 each
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June 16
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Sale, 400 units @ $90
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June 14
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Purchase 800 units @ $68 each
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June 20
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Sale, 500 units @ $90
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June 25
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Purchase 250 units @ $70
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Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month?
(Points : 6)
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$61,700
$60,300
$58,500
$31,100
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22.Corresponds to CLO 6(b)
The following is a record of Meyer Corporation’s inventory transactions for the current month:
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October 1
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Balance, 500 units @ $24 each
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October 9
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Sale, 500 units @ $51
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October 12
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Purchase 900 units @ $26 each
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October 19
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Sale, 800 units @ $51
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October 25
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Purchase 600 units @ $27 each
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Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory on October 31?
(Points : 6)
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$18,900
$16,800
$34,600
$17,200
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23.Corresponds to CLO 6(c)
The following is a record of Tiller Corporation’s inventory transactions for the current month:
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January 1
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Balance, 500 units @ $10 each
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January 5
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Sale, 290 units @ $25
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January 11
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Purchase, 300 units @ $12 each
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January 13
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Sale, 250 units @ $25
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January 23
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Purchase, 400 units @ $13 each
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January 27
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Sale, 310 units @ $25
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Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the cost of goods sold for the month of January?
(Points : 6)
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$14,004
$9,775
$4,085
$4,025
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24.Corresponds to CLO 6(d)
The following is a record of Caulder Corporation’s inventory transactions for the current month:
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March 1
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Balance, 500 units @ $40 each
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March 12
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Sale, 200 units @ $85
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March 16
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Purchase, 300 units @ $42 each
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March 22
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Sale, 350 units @ $85
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March 28
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Purchase, 300 units @ $43 each
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Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory on March 31?
(Points : 6)
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$22,900
$22,100
$22,600
$23,400
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25.Corresponds to CLO 7(a)
In the context of dollar-value LIFO, when inventory in base year dollars increases, (Points : 6)
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The LIFO reserve decreases
The LIFO price index increases
A LIFO layer is created
A LIFO layer is liquidated
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26.Corresponds to CLO 7(b)
Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 450,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:
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Date
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Inventory at Current Prices
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Current Price Index
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December 31, 2012
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$513,600
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107
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December 31, 2013
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$580,000
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125
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December 31, 2014
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$650,000
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130
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What is the ending inventory at December 31, 2012 under dollar-value LIFO?
(Points : 6)
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$464,000
$464,980
$482,100
$497,080
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27.Corresponds to CLO 7(c)
What is primary purpose of stating inventories at lower-of-cost-or-market? (Points : 6)
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To report a loss when there is a decrease in the future utility below the original cost
To be conservative
To report a loss whenever there is a decrease in the future utility
To permit future profits to be recognized
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28.Corresponds to CLO 7(d)
If the historical cost of product X is $64, the selling price of product X is $90, the costs to sell product X are $14, the replacement cost for product X is $55, and the normal profit margin is 30% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison? (Points : 6)
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$64
$49
$76
$55
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29.Corresponds to CLO 8(a)
Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 40%. The following information is available:
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Inventory, November 1
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$500,000
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Purchases during November
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$650,000
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Sales during November
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$900,000
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The estimated cost of inventory at November 30 is
(Points : 6)
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$360,000
$540,000
$610,000
$650,000
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30.Corresponds to CLO 8(b)
Which of the following is not a basic assumption of the gross profit method of estimating inventory? (Points : 6)
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The beginning inventory plus the purchases equal total goods to be accounted for.
Goods not sold must be on hand.
The sales, reduced to cost, deducted from the sum of the opening inventory plus purchases, equal ending inventory.
The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period.
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31.Corresponds to CLO 8(c)
Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:
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Cost
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Retail
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Beginning Inventory
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$30,000
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$50,000
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Purchases
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$180,000
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$250,000
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Freight-In
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$2,500
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—-
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Net Markups
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$8,500
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Net Markdowns
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$10,000
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Employee Discounts
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$1,000
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Sales
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$205,000
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What is the cost to retail ratio?
(Points : 6)
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68.88%
68.07%
70.35%
70.83%
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32.Corresponds to CLO 8(d)
Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:
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Cost
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Retail
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Beginning Inventory
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$300,000
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$420,000
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Purchases
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$1,450,000
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$2,000,000
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Net Markups
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$80,000
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Net Markdowns
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$30,000
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Sales
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$1,900,000
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Capital City determines that the cost-to-retail ratio is 70%. What is the ending inventory at cost?
(Points : 6)
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$520,000
$399,000
$300,000
$570,000
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