In: Accounting
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 sold for the year using the retail inventory method and the
average cost application.
2. Estimate Sparrow’s ending inventory and cost of
goods sold for the year using the retail inventory method and the
conventional application.
(For all requirements, round Cost-to-retail percentage to
two decimal places and final answers to whole
dollars.)