If a material amount of inventory has been ordered through a formal purchase contract at the balance sheet date for future delivery at firm prices,
a. this fact must be disclosed.
b. disclosure is required only if prices have declined since the date of the order.
c. disclosure is required only if prices have since risen substantially.
d. an appropriation of retained earnings is necessary.
Answer: a. this fact must be disclosed.
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Cully Furniture buys two products for resale: big shelves (B)and medium shelves (M). Each big shelf costs $500 and requires 100 cubic feet of storage space, and each medium shelf costs $300 and requires 90 cubic feet of storage space
The company has $75,000 to invest in shelves this week, and the warehouse has 18,000 cubic feet available for storage. Profit for each big shelf is $300 and for each medium shelf is $150. Which of the following is not a feasible purchase combination? A) 100 big shelves and 82 medium shelves B) 150 big shelves and 0 medium shelves C) 100 big shelves and 100 medium shelves D) 100 big shelves and 0 medium shelves