Wade Company Estimates the Cost of Its Physical Inventory at March

question 51

Multiple Choice

Wade Company estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 25%. The following account balances are available: $\begin{array}{lr}\text { Inventory, March 1 } & \$ 2,000,000 \\\text { Purchases during March } & 1,000,000 \\\text { Purchase returns } & 52,000 \\\text { Sales during March } & 1,700,000\end{array}$ The estimate of the cost of inventory at March 31 would be

• A) $1,248,000.
• B) $1,360,000.
• C) $1,588,000.
• D) $1,673,000.

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Definitions:

Rights Offering

A method by which a company raises additional capital by giving existing shareholders the right to purchase additional shares at a predetermined price, often at a discount to the market price.

Market Price

The current trading rate for services or assets in the market.

Subscription Price

The price at which existing shareholders can purchase additional shares of stock before it is offered to the public.

Subscription Price

The price at which existing shareholders are allowed to buy additional shares in a rights issue, usually at a discount to the current market price.