Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold...


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 1 year ago

Next > < Previous

Related 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...

Subjects