18.

The Groupo Co. uses the retail method to compute its ending inventory.

General Ledger balances on 12/31/10 before calculating ending inventory:

	Merchandise Inventory			Purchases			Sales
1/1/10	20,000			80,000				110,000

Beginning inventory at retail = $35,000

Purchases at retail = $125,000

Based on the information above. What is the ending inventory at retail?

A. 10000

B. 45000

C. 50000

D. 160000

19.

The Groupo Co. uses the retail method to compute its ending inventory.

General Ledger balances on 12/31/10 before calculating ending inventory:

	Merchandise Inventory			Purchases			Sales
1/1/10	20,000			80,000				110,000

Beginning inventory at retail = $35,000

Purchases at retail = $125,000

Calculate the cost to retail ratio based on the above. Choose the closest answer.

A. 64.0%

B. 64.5%

C. 62.5%

D. MORE THAN 68%

20. The Stevens Co. has suffered losses in its film developing division for the last two years. On 12/31/10, the controller decided that he would need to apply the impairment test to film developing equipment and make any required adjustments. He gathered the following information and determined that the asset was impaired:

Balance in the Equipment account = $400,000

Balance in Accumulated Depreciation = $300,000

Future value of cash flows associated with the asset = $75,000

Fair value of asset on 12/31/10 = $60,000.

Why is the asset considered to be "impaired?"

A. Cost of equipment ($400,000) exceeds future cash flows ($75,000)

B. Book value of the equipment ($100,000) exceeds future cash flows ($75,000)

C. Book value of the equipment $100,000) exceeds fair value ($60,000)

D. Fair value of asset ($60,000) is less than future cash flows ($75,000)