Question

In: Accounting

San Lorenzo General Store uses a periodic inventory system and the retail inventory method to estimate...

San Lorenzo General Store uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of October 2018:

Cost Retail
Beginning inventory $ 47,000 $ 62,000
Net purchases 10,480 32,800
Net markups 2,400
Net markdowns 1,400
Net sales 44,000


Required:
Complete the table below to estimate the average cost of ending inventory and cost of goods sold for October.

Solutions

Expert Solution

Answer:

Cost of goods available for sale = Cost of beginning inventory + cost of net purchases
Cost of goods available for sale = $47,000 + 10,480
Cost of goods available for sale = $57,480

Retail value of goods available for sale = Retail value of beginning inventory + retail value of net purchases
Retail value of goods available for sale = $62,000 + $32,800
Retail value of goods available for sale = $94,800

Ratio of cost of goods available for sale to retail value of goods available for sale = Cost of goods available for sale / retail value of goods available for sale
Ratio of cost of goods available for sale to retail value of goods available for sale = $57,480 / $94,800
Ratio of cost of goods available for sale to retail value of goods available for sale = 0.61

Retail value of ending inventory = Beginning inventory + net purchases + net markups - net markdowns - net sales
Retail value of ending inventory = $62,000 + $32,800 + $2,400 - $1,400 - $44,000
Retail value of ending inventory = $51,800

Average Cost of Ending Inventory = Retail Value of Ending Inventory * ratio of cost of goods available for sale to retail value of goods available for sale
Average Cost of Ending Inventory = $51,800 * 0.61
Average Cost of Ending Inventory = $31,598

Cost of goods sold = Retail value of net sales * ratio of cost of goods available for sale to retail value of goods available for sale
cost of goods sold = $44,000 * 0.61
cost of goods sold = $26,840

ekkarill92 answered 6 months ago
Next > < Previous

Related Solutions

Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory...
Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the quarter ending September 30, 2018: Cost Retail Beginning inventory $ 410,000 $ 545,000 Net purchases 910,000 1,320,000 Freight-in 44,400 Net markups 59,000 Net markdowns 29,000 Net sales 1,255,000 Estimate ending inventory and cost of goods sold (average cost).
Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory...
Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2021: Cost Retail Beginning inventory $ 20,200 $ 39,800 Net purchases 10,100 ? Net markups 4,800 Net markdowns 1,800 Net sales ? The company used the average cost flow method and estimated inventory at the end of September to be $15,200.50. If the company had used the LIFO cost...
Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory...
Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2021:                                                                  Cost                          Retail Beginning inventory                             23000                       37000 Net purchases                                     11500                         ? Net markups                                                                        4200 Net markdowns                                                                    1200 Net sales                                                                               ? The company used the average cost flow method and estimated inventory at the end of September to be $19,607.50. If the company had used the LIFO cost...
Almaden Valley Variety Store uses the retail inventory method to estimate ending inventory and cost of...
Almaden Valley Variety Store uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2021 are as follows: Almaden Valley Variety Store uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2021 are as follows: Cost Retail Beginning inventory $ 22,000 $ 30,000 Purchases 112,600 175,000 Freight-in 2,500 Purchase returns 4,500 12,000 Net markups 11,000 Net markdowns 8,000 Normal spoilage 5,200 Net sales 162,000 Required: Complete the...
Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The...
Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during 2016: Cost Retail Inventory, January 1 $28,800 $41,500 Purchases 66,300 104,100 Markups (net) — 1,700 Markdowns (net) — 700 Sales — 82,300 Required: 1. Compute the ending inventory by the retail inventory method for the following cost flow assumption: FIFO. Round the cost-to-retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole...
Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The...
Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during 2016: Cost Retail Inventory, January 1 $29,000 $40,200 Purchases 67,500 100,100 Markups (net) — 2,200 Markdowns (net) — 700 Sales — 88,400 Required: 1. Compute the ending inventory by the retail inventory method for the following cost flow assumption: FIFO. Round the cost-to-retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole...
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial...
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March 2021: Cost Retail Beginning inventory $ 52,000 $ 72,000 Purchases 219,000 412,000 Freight-in 19,470 Purchase returns 5,500 8,000 Net markups 7,000 Net markdowns 4,700 Normal breakage 8,000 Net sales 292,000 Employee discounts 3,000 Sales are recorded net of employee discounts. Required: 1. Compute estimated ending inventory and cost...
Brandon Shoe Store uses the retail inventory method to estimate its monthly ending inventories. The following...
Brandon Shoe Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available at November 30, 2021: Women’s Shoes Men’s Shoes Cost Retail Cost Retail Beginning inventory $276,000 $424,000 $191,000 $323,000 Purchases 1,181,000 1,801,000 1,046,000 1,772,000 Purchase returns and allowances 24,600 37,000 21,900 36,400 Freight in 6,000 7,200 Sales 1,826,000 1,651,000 Sales returns and allowances 28,000 25,000 At November 30, Brandon Shoe Store takes a physical inventory count at retail. The actual retail values...
Retail inventory method; various cost methods Sparrow Company uses the retail inventory method to estimate ending...
Retail inventory method; various cost methods Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2016 are as follows: Cost Retail Beginning Inventory $90,000 $180,000 Purchases $355,000 $581,000 Freight-in $9,000 Purchase Returns $7,000 $11,000 Net Markups $16,000 Net Markdowns $12,000 Normal Spoilage $3,000 Abnormal Spoilage $4,800 $8,000 Sales $540,000 Sales Returns $10,000 The company records sales net of employee discounts. Discounts for 2016 totaled $4,000. Required: Estimate Sparrow’s ending inventory and...
Grand, Inc. is a retail clothing store that uses the "Retail" method to value inventory. The...
Grand, Inc. is a retail clothing store that uses the "Retail" method to value inventory. The following information is presented below regarding the current operations of the company: Cost Retail Initial Inventory 27,000 45,000 Purchase 58,000 116,000 Sales 125,000 Determine the ending inventory valuation for the current period using the "Retail Method":
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT