Question

In: Accounting

Presented below is information related to Skysong Company. Cost Retail Beginning inventory $ 56,640 $99,900 Purchases...

Presented below is information related to Skysong Company.

Cost

Retail

Beginning inventory $ 56,640 $99,900
Purchases (net) 111,250 216,800
Net markups 10,119
Net markdowns 24,768
Sales revenue 173,490
Compute the ending inventory at retail.
Ending inventory $
Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%)

Cost-to-retail percentage

(1) Excluding both markups and markdowns. %
(2) Excluding markups but including markdowns. %
(3) Excluding markdowns but including markups. %
(4) Including both markdowns and markups. %
Which of the methods in (b) above does the following?
(1) Provides the most conservative estimate of ending inventory.

Excluding Both Markups and Markdowns.Excluding Markdowns but Including MarkupsExcluding Markups but Including MarkdownsIncluding Both Markdowns and Markups

(2) Provides an approximation of lower-of-cost-or-market.

Excluding Both Markups and Markdowns.Excluding Markdowns but Including MarkupsExcluding Markups but Including MarkdownsIncluding Both Markdowns and Markups

(3) Is used in the conventional retail method.

Excluding Both Markups and Markdowns.Excluding Markdowns but Including MarkupsExcluding Markups but Including MarkdownsIncluding Both Markdowns and Markups

Compute ending inventory at lower-of-cost-or-market. (Round ratio to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)
Ending inventory $
Compute cost of goods sold based on (d). (Round answer to 0 decimal places, e.g. 6,225.)
Cost of goods sold $
Compute gross margin based on (d). (Round answer to 0 decimal places, e.g. 6,225.)
Gross margin $

Solutions

Expert Solution

1.

Cost Retail
Beginning inventory $56,640 $99,900
Purchases $111,250 $216,800
Goods available for sale $167,890 $316,700
Add: Net markups $10,119
Less: Net markdowns ($24,768)
Less: Net sales ($173,490)
Ending inventory at retail $128,561

2.

Cost Retail Cost to retail ratio
Excluding both markups and markdowns $167,890 $316,700 53.01%
Excluding markups but including markdowns $167,890 $291,932 57.51%
Excluding markdowns but including markups $167,890 $326,819 51.37%
Including both markups and markdowns $167,890 $302,051 55.58%

3.

A - Excluding markdowns but including markups

B- Excluding markdowns but including markups

C- Excluding markdowns but including markups

4.

Lower of cost of market

Cost Retail
Beginning inventory $56,640 $99,900
Purchases $111,250 $216,800
Total $167,890 $316,700
Add: Net markups $10,119
Total $326,819
Less: Net markdowns ($24,768)
Goods available for sale $302,051
Less: Sales ($173,490)
Ending inventory at retail $128,561
Ending inventory at cost $66,042

Cost to retail ratio =$167,890/$326,819 =51.37%

Ending inventory at cost =$128,561 ×51.37% =$66,042

Cost of goods sold =$167,890-$66,042

=$101,848

Gross profit =$173,490-$101,848

=$71,642

______×______


Related Solutions

Presented below is information related to Flounder Company. Cost Retail Beginning inventory $ 62,430 $90,900 Purchases...
Presented below is information related to Flounder Company. Cost Retail Beginning inventory $ 62,430 $90,900 Purchases (net) 113,840 183,000 Net markups 9,421 Net markdowns 26,181 Sales revenue 182,600 Compute the ending inventory at retail. Ending inventory $ Link to Text Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%) Cost-to-retail percentage (1) Excluding both markups and markdowns. % (2) Excluding markups but including markdowns. % (3) Excluding markdowns but including markups. % (4)...
Presented below is information related to Pronghorn Company. Cost Retail Beginning inventory $ 61,600 $107,300 Purchases...
Presented below is information related to Pronghorn Company. Cost Retail Beginning inventory $ 61,600 $107,300 Purchases (net) 120,170 180,700 Net markups 10,325 Net markdowns 26,679 Sales revenue 187,090 a) Compute ending inventory at lower-of-cost-or-market. b) Compute cost of goods sold based on (a) c) Compute gross margin based on (a)
Presented below is information related to Martinez Company. Cost Retail Beginning inventory $ 53,760 $107,700 Purchases...
Presented below is information related to Martinez Company. Cost Retail Beginning inventory $ 53,760 $107,700 Purchases (net) 119,400 204,800 Net markups 9,605 Net markdowns 26,513 Sales revenue 175,600 Compute the ending inventory at retail. Ending inventory $ Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%) Cost-to-retail percentage (1) Excluding both markups and markdowns. % (2) Excluding markups but including markdowns. % (3) Excluding markdowns but including markups. % (4) Including both markdowns...
Presented below is information related to Pronghorn Company. Cost Retail Beginning inventory $ 54,510 $96,300 Purchases...
Presented below is information related to Pronghorn Company. Cost Retail Beginning inventory $ 54,510 $96,300 Purchases (net) 122,230 194,700 Net markups 9,740 Net markdowns 25,731 Sales revenue 203,890 Compute the ending inventory at retail. Ending inventory $ Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%) Cost-to-retail percentage (1) Excluding both markups and markdowns. % (2) Excluding markups but including markdowns. % (3) Excluding markdowns but including markups. % (4) Including both markdowns...
Presented below is information related to Culver Company. Cost Retail Beginning inventory $ 63,190 $103,900 Purchases...
Presented below is information related to Culver Company. Cost Retail Beginning inventory $ 63,190 $103,900 Purchases (net) 117,310 182,500 Net markups 11,288 Net markdowns 26,066 Sales revenue 170,960 Compute the ending inventory at retail. Ending inventory $ Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%) Cost-to-retail percentage (1) Excluding both markups and markdowns. % (2) Excluding markups but including markdowns. % (3) Excluding markdowns but including markups. % (4) Including both markdowns...
Presented below is information related to Martinez Company. Cost Retail Beginning inventory $362,797 $286,000 Purchases 1,370,000...
Presented below is information related to Martinez Company. Cost Retail Beginning inventory $362,797 $286,000 Purchases 1,370,000 2,145,000 Markups 95,100 Markup cancellations 14,800 Markdowns 32,900 Markdown cancellations 5,100 Sales revenue 2,193,000 Compute the inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)
Presented below is information related to Novak Company. Cost Retail Beginning inventory $150,815 $283,000 Purchases 1,369,000...
Presented below is information related to Novak Company. Cost Retail Beginning inventory $150,815 $283,000 Purchases 1,369,000 2,130,000 Markups 93,200 Markup cancellations 14,700 Markdowns 35,900 Markdown cancellations 4,900 Sales revenue 2,186,000 Compute the inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.) Ending inventory using conventional retail inventory method
Presented below is information related to Kingbird Company. Cost Retail Beginning inventory $186,032$281,000 Purchases 1,393,0002,147,000 Markups...
Presented below is information related to Kingbird Company. Cost Retail Beginning inventory $186,032$281,000 Purchases 1,393,0002,147,000 Markups 93,500 Markup cancellations 15,100 Markdowns 37,000 Markdown cancellations 4,500 Sales revenue 2,236,000 Compute the inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)
Presented below is information related to Marin, Inc. Cost Retail Beginning inventory $331,500 $585,000 Purchases 1,482,000...
Presented below is information related to Marin, Inc. Cost Retail Beginning inventory $331,500 $585,000 Purchases 1,482,000 2,613,000 Freight on purchases 63,180 Markups 136,500 Markup cancellations 109,200 Abnormal shortage 11,700 20,280 Markdowns 68,640 Markdown cancellations 9,360 Employee discounts 4,056 Sales revenue 2,788,500 Sales returns 78,000 Normal shortage 13,650 Purchase returns 17,160 31,980 Compute ending inventory by the conventional retail inventory method. (Round percentages for computational purposes to 1 decimal place, e.g. 0.4158 to 41.6% and final answer to 0 decimal places,...
Presented below is information related to Larkspur, Inc. Cost Retail Beginning inventory $416,500 $735,000 Purchases 1,862,000...
Presented below is information related to Larkspur, Inc. Cost Retail Beginning inventory $416,500 $735,000 Purchases 1,862,000 3,283,000 Freight on purchases 79,380 Markups 171,500 Markup cancellations 137,200 Abnormal shortage 14,700 25,480 Markdowns 86,240 Markdown cancellations 11,760 Employee discounts 5,096 Sales revenue 3,503,500 Sales returns 98,000 Normal shortage 17,150 Purchase returns 21,560 40,180 Compute ending inventory by the conventional retail inventory method. (Round percentages for computational purposes to 1 decimal place, e.g. 0.4158 to 41.6% and final answer to 0 decimal places,...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT