Major Grey Company Uses the Retail Inventory Method to Value

question 69

Multiple Choice

Major Grey Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year: What cost to retail ratio should be used to estimate ending inventory?

• A) Rs187,500,000 ÷ Rs260,000,000
• B) Rs187,500,000 ÷ Rs465,000,000
• C) Rs185,000,000 ÷ Rs260,000,000
• D) Rs185,000,000 ÷ Rs265,000,000

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Definitions:

Leasing

A financial arrangement where a lessee pays the lessor for the use of an asset for a specified period of time, without owning the asset.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Net Advantage

The total benefits received minus the costs incurred from an investment or business decision.

Resale Value

The estimated market value of an asset at the future date when it is likely to be sold, often used in reference to vehicles and property.