Question
In: Accounting
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 company’s
warehouses.
Required:
1. Calculate the estimated inventory at the end of
August, assuming a gross profit ratio of 25%.
2. Calculate the estimated inventory at the end of
August, assuming a markup on cost of 25%.
Solutions
Expert Solution
| 1 | Beginning Inventory | 125000 | |||
| Plus: Net purchases | 219200 | ||||
| Freight In | 5700 | ||||
| Cost of goods available for sale | 349900 | ||||
| Less: Cost of goods sold | |||||
| Net sales | 345500 | ||||
| Less: Estimated gross profit | 86375 | ||||
| Estimated cost of goods sold | 259125 | ||||
| Estimated cost of inventory before theft | 90775 | ||||
| Less: Stolen Inventory | 12000 | ||||
| Estimated ending Inventory | 78775 | ||||
| 2 | Beginning Inventory | 125000 | |||
| Plus: Net purchases | 219200 | ||||
| Freight In | 5700 | ||||
| Cost of goods available for sale | 349900 | ||||
| Less: Cost of goods sold | |||||
| Net sales | 345500 | ||||
| Less: Estimated gross profit | 69100 | (345500/125)*25 | |||
| Estimated cost of goods sold | 276400 | ||||
| Estimated cost of inventory before theft | 73500 | ||||
| Less: Stolen Inventory | 12000 | ||||
| Estimated ending Inventory | 61500 | ||||
ekkarill92 answered 2 years agoRelated Solutions
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 $122,000. The following information for the month
of August was available from company records: Purchases $ 218,000
Freight-in 5,100 Sales 349,000 Sales returns 8,900 Purchases
returns 4,200 In addition, the controller is aware of $12,000 of
inventory that was stolen during August from one of the...
Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods...
Royal Gorge 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 October was $59,300. The following information for the month
of November was available from company records:
Purchases
$
118,000
Freight-in
3,800
Sales
220,000
Sales returns
9,000
Purchases returns
8,000
In addition, the controller is aware of $12,000 of inventory that
was stolen during November from one of...
Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods...
Royal Gorge 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 October was $59,100. The following information for the month
of November was available from company records:
Purchases
$
116,000
Freight-in
3,600
Sales
210,000
Sales returns
8,000
Purchases returns
7,000
In addition, the controller is aware of $11,000 of inventory that
was stolen during November from one of...
Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly
Royal Gorge 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 October was $58,500. The following information for the month of November was available from company records:
Purchases.............................$110,000
Freight-in.....................................3,000
Sales..........................................180,000
Sales returns................................5,000
Purchases returns......................4,000
In addition, the controller is aware of $8,000 of inventory that was stolen during November from one of the company’s warehouses.
Required:
1....
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 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...
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...
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