Question

The records of Alaska Company provide the following information for the year ended December 31

at coast at Retail

January 1 beginning inventory $ 472,950 $ 928,750

Cost of goods purchased 2,843,512 6,280,950
Sales 5,511,700
Sales returns 46,200

  Required:
1. Use the retail inventory method to estimate the company’s year-end inventory at cost.  
2. A year-end physical inventory at retail prices yields a total inventory of $1,691,800. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.

Complete this questions by entering your answers in the tabs below.

Required 1
Required 2

Use the retail inventory method to estimate the company’s year-end inventory at cost. (Round your ratio calculations to 2 decimal places. (i.e. 10.15%))

At Cost Cost-to-Retail Ratio At Retail
Beginning inventory $472,950 $928,750
Cost of goods purchased 2,843,512 6,280,950
Cost of goods available for sale $3,316,462 $7,209,700
Net sales at retail

Complete this questions by entering your answers in the tabs below

Use the retail inventory method to estimate the company’s year-end inventory at cost. (Round your ratio calculations to 2 decimal places. (i.e. 10.15%))

	At Cost Cost-to-Retail Ratio At Retail Beginning inventory $472,950 $928,750 Cost of goods purchased 2,843,512 6,280,950 Cost of goods available for sale $3,316,462 $7,209,700 Net sales at retail

A year-end physical inventory at retail prices yields a total inventory of $1,691,800. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail. (Round your ratio calculations to 2 decimal places. (i.e. 10.15%))

	ALASKA COMPANY Inventory Shortage December 31 At Cost At Retail Estimated inventory not attempted not attempted Physical inventory not attempted not attempted Inventory shortage

Answer 1

1. Use the retail inventory method to estimate the company’s year-end inventory.

                                     ALASKA CO

                               Estimated Inventory

                                  December 31

Goods available for sale	At Cost	At Retail
Beginning inventory	472950	928750
Cost of goods purchased	2843512	6280950
Goods available for sale	3316462	7209700
Sales		5511700
Less: Sales returns		46200
Net sales		5465500
Ending inventory at retail( 7209700 - 5465500)		1744200
Cost ratio: 3316462/7209700 = 0.46 or 46%
Ending inventory at cost (1744200 x 46%)	802332

1. A year-end physical inventory at retail prices yields a total inventory of $1691800. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.

                                          ALASKA CO.

                                 Inventory Shortage

                                        December 31

	At Cost	At Retail
Estimated inventory (from part 1)	802332	1744200
Physical inventory (46% Cost ratio)	778228 (1691800 x 46%)	1691800
Inventory shortage	24104	52400