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California Inc

question 98

Multiple Choice

California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2013. In preparing its insurance claim on the inventory loss, the company developed the following data: Inventory January 1, 2013, $300,000; sales and purchases from January 1, 2013, to May 1, 2013, $1,300,000 and $875,000, respectively. California consistently reports a 40% gross profit. The estimated inventory on May 1, 2013, is:

Understand the legal effects of alterations, misspellings, and unauthorized signatures on negotiable instruments.

Describe the Shelter Principle and its application in the context of negotiable instruments.

Comprehend the concept of taking an instrument “for value” and how it applies to the HDC doctrine.

Understand the implications of the FTC rules established in the 1970s for protecting consumers against HDC abuses.

Definitions:

Inventory Reporting

The process of documenting the quantity and value of a company's stock of goods.

FOB Destination

A shipping term indicating that the seller retains ownership and responsibility for the goods until they are delivered to the buyer's specified location.

Ending Inventory Balance

The total value of all goods available for sale at the end of an accounting period.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal, utilized in inventory valuation and accounts receivable.