____ 3. When applying the indirect method [allowance method] of accounting for Lower of Cost or Market inventory values which of the following accounts should be debited when the initial adjusting entry is made and market is lower than cost?

A. Loss Due to Market Decline in Inventory Value.

B. Cost of Goods Sold.

C. Inventory

D. Allowance to Reduce Inventory to Market

E. Allowance for loss of inventory

The following data is available for the Reed Company for use in the Conventional Retail method of inventory estimation.

COST RETAIL

Beginning Inventory $ 49,250 $ 70,000

Purchases 165,130 320,000

Freight-in $ 10,000

Net markups $ 20,000

Net markdowns $ 14,000

Net Sales $336,000

____ 4. Calculate ending inventory at cost.

1. $60,000
2. $88,000
3. $33,600
4. $32,860
5. $33,000
6. $36,600