Question
In: Accounting
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
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 $ 92,000 $ 182,000 Purchases 360,000 582,000 Freight-in 9,200 Purchase returns 7,200 11,200 Net markups 16,200 Net markdowns 12,200 Normal spoilage 3,200 Abnormal spoilage 4,840 8,200 Sales 542,000 Sales returns 10,200 The company records sales net of employee discounts. Discounts for 2016 totaled $4,200. Required: 1. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. (Round your cost-to-retail percentage calculation to 2 decimal places.) 2. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. (Round your cost-to-retail percentage calculation to 2 decimal places.)
Solutions
Expert Solution
| Part1 | Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application | |||||||||||
| Cost | Retail | |||||||||||
| Beginning inventory | $92,000 | $1,82,000 | ||||||||||
| Add: Purchases | 3,60,000 | 5,82,000 | ||||||||||
| Freight-in | 9,200 | |||||||||||
| Deduct: Purchase returns | -7,200 | -11,200 | ||||||||||
| Add: Net markups | 16,200 | |||||||||||
| Deduct: Net markdowns | -12,200 | |||||||||||
| Abnormal spoilage | -4,840 | -8,200 | ||||||||||
| Goods available for sale | 4,49,160 | 7,48,600 | 60.00 | |||||||||
| Cost/Retail % = $449,160 ÷ $748,600 = 60% | ||||||||||||
| Deduct: Normal spoilage | (3,200) | |||||||||||
| Net sales (542,000- 10,200) | (5,31,800) | |||||||||||
| Employee discounts | -4200 | |||||||||||
| Ending Inventory at retail | $209400.000 | |||||||||||
| Ending inventory at cost (60%*209400) | 125640 | |||||||||||
| Cost of goods sold | 3,23,520 | |||||||||||
| PART 2 | Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. | |||||||||||
| Cost | Retail | |||||||||||
| Beginning inventory | 92000 | 182000 | ||||||||||
| Add: Purchases | 360000 | 582000 | ||||||||||
| Freight-in | 9200 | |||||||||||
| Deduct: Purchase returns | -7200 | -11200 | ||||||||||
| Add: Net markups | 16200 | |||||||||||
| Abnormal spoilage | -4840 | -8200 | ||||||||||
| Goods available for sale | 449160 | 760800 | 59.04 | |||||||||
| Cost/Retail % = $449,160 ÷ $760800 = 59% | ||||||||||||
| Deduct: Net Markdown | -12200 | |||||||||||
| Goods available for sale | 449160 | 748600 | ||||||||||
| Deduct: Normal spoilage | -3200 | |||||||||||
| Net sales (542,000- 10,200) | -531800 | |||||||||||
| Employee discounts | -4200 | |||||||||||
| Ending Inventory at retail | 209400 | |||||||||||
| Ending inventory at cost (59%*209400) | -123546 | |||||||||||
| Cost of goods sold | 325614 | |||||||||||
ekkarill92 answered 2 years agoRelated Solutions
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2018 are as
follows:
Cost
Retail
Beginning inventory
$
89,000
$
179,000
Purchases
352,000
579,000
Freight-in
8,900
Purchase returns
6,900
10,900
Net markups
15,900
Net markdowns
11,900
Normal spoilage
2,900
Abnormal spoilage
4,512
7,900
Sales
539,000
Sales returns
9,900
The company records sales net of employee discounts. Discounts for
2018 totaled $3,900.
Required:
1. Estimate Sparrow’s ending inventory and cost of
goods...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2016 are as
follows:
Cost Reatail
Begining inventory. $90,000. $180,000
Purchases 335,000. 580,000
Freight in 9,000
Purchase returns. 7,000 11,000
Net markups 16,000
Net markdowns 12,000
Normal spoilage 3,000
Abnormal spoliage. 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 cost of goods sold...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2021 are as
follows: Cost Retail Beginning inventory $ 83,000 $ 173,000
Purchases 368,000 573,000 Freight-in 8,300 Purchase returns 6,300
10,300 Net markups 15,300 Net markdowns 11,300 Normal spoilage
2,300 Abnormal spoilage 4,405 7,300 Sales 533,000 Sales returns
9,300 The company records sales net of employee discounts. Employee
discounts for 2021 totaled $3,300.
Required: 1. Estimate Sparrow’s ending inventory and cost of...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2018 are as
follows:
Cost
Retail
Beginning inventory
$
96,000
$
186,000
Purchases
361,000
586,000
Freight-in
9,600
Purchase returns
7,600
11,600
Net markups
16,600
Net markdowns
12,600
Normal spoilage
3,600
Abnormal spoilage
5,520
8,600
Sales
546,000
Sales returns
10,600
The company records sales net of employee discounts. Discounts for
2018 totaled $4,600.
Required:
1. Estimate Sparrow’s ending inventory and cost of
goods...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2018 are as
follows:
Cost
Retail
Beginning inventory
$
87,000
$
177,000
Purchases
359,000
577,000
Freight-in
8,700
Purchase returns
6,700
10,700
Net markups
15,700
Net markdowns
11,700
Normal spoilage
2,700
Abnormal spoilage
4,240
7,700
Sales
537,000
Sales returns
9,700
The company records sales net of employee discounts. Discounts for
2018 totaled $3,700.
Required:
1. Estimate Sparrow’s ending inventory and cost of
goods...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2018 are as
follows:
Cost
Retail
Beginning inventory
$
81,000
$
171,000
Purchases
375,000
571,000
Freight-in
8,100
Purchase returns
6,100
10,100
Net markups
15,100
Net markdowns
11,100
Normal spoilage
2,100
Abnormal spoilage
4,322
7,100
Sales
531,000
Sales returns
9,100
The company records sales net of employee discounts. Discounts for
2018 totaled $3,100.
Required:
1. Estimate Sparrow’s ending inventory and cost of
goods...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2018 are as
follows:
Cost
Retail
Beginning inventory
$
80,000
$
170,000
Purchases
347,000
570,000
Freight-in
8,000
Purchase returns
6,000
10,000
Net markups
15,000
Net markdowns
11,000
Normal spoilage
2,000
Abnormal spoilage
3,705
7,000
Sales
530,000
Sales returns
9,000
The company records sales net of employee discounts. Discounts for
2018 totaled $3,000.
Required:
1. Estimate Sparrow’s ending inventory and cost of
goods...
Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold....
Sparrow Company uses the retail inventory method to estimate
ending inventory and cost of goods sold. Data for 2018 are as
follows:
Cost
Retail
Beginning
inventory
$
94,000
$
184,000
Purchases
364,000
584,000
Freight-in
9,400
Purchase
returns
7,400
11,400
Net markups
16,400
Net
markdowns
12,400
Normal
spoilage
3,400
Abnormal
spoilage
4,919
8,400
Sales
544,000
Sales
returns
10,400
The company records sales net of employee discounts. Discounts for
2018 totaled $4,400.
Required:
1. Estimate Sparrow’s ending inventory and cost of
goods...
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...
Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold...
Henderson Company uses the gross profit method to estimate
ending inventory and cost of goods sold when preparing monthly
financial statements required by its bank. Inventory on hand at the
end of July was $125,000. The following information for the month
of August was available from company records:
Purchases
$
224,000
Freight-in
5,700
Sales
355,000
Sales returns
9,500
Purchases returns
4,800
In addition, the controller is aware of $12,000 of inventory that
was stolen during August from one of the...
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