On December 31, a Company Needed to Estimate Its Ending

question 146

Multiple Choice

On December 31, a company needed to estimate its ending inventory to prepare its fourth quarter financial statements. The following information is currently available: Inventory as of October 1: $12,500
Net sales for fourth quarter: $40,000
Net purchases for fourth quarter: $27,500
The company typically achieves a gross profit ratio of 15%. Ending Inventory under the gross profit method would be:

• A)$4,000
• B)$6,000
• C)$10,000
• D)$16,000
• E)$34,000

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Definitions:

Moon Illusion

A visual illusion where the Moon appears larger near the horizon than it does while higher up in the sky.

Size Constancy

A perceptual phenomenon where the perceived size of an object remains constant despite changes in the distance from which it is viewed.

Motion Parallax

A depth cue in visual perception where objects closer to the observer move faster across the visual field than objects further away.

Interposition

A visual cue in which an object partially blocks the view of another, indicating the first object is closer to the viewer.