TRUE OR FALSE

9. TRUE OR FALSE

10 TRUE OR FALSE

9. On February 2, 2013, a fire destroys the entire inventory of Blumer Co. The following information was found in accounting records stored in a different location from the fire-damaged store: Purchases, $130,000; Sales $230,000; beginning inventory, $40,000; average gross profit percentage during the past five years, 30%. Based on the above information, indicate whether each of the following statements is true or false. a. The cost of goods available for sale is $230,000. b. The cost of goods sold as a percent of sales is 70%. c. The estimated cost of goods sold is $170,000. d. Estimated inventory lost in the fire is $9,000. e. Estimated gross profit is $69,000. 10. Indicate whether each of the following statements is true or false. a. The cost of interest given up to use one's own money to buy inventory is often called "inventory loss." b. Even if a firm buys inventory with its own money, rather than by borrowing, there is still a "cost" involved with financing the inventory. c. As much as possible, businesses should reduce the time for which goods stay in inventory. d. Buying inventory on account (with no interest charged) is always the best way to avoid inventory-financing cost. e. One way to reduce inventory-financing cost is to offer sales discounts to customers