Question

In: Accounting

Novak Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements....

Novak Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2021.

Inventory, October 1, 2021
    At cost $51,800
    At retail 76,700
Purchases (exclusive of freight and returns)
    At cost 241,978
    At retail 424,300
Freight-in 16,500
Purchase returns
    At cost 5,400
    At retail 8,100
Markups 8,900
Markup cancellations 2,000
Markdowns (net) 3,500
Normal spoilage and breakage 9,900
Sales revenue 392,600


(a) Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-or-market inventory for October 31, 2021. (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 at lower-of-cost-or-market

$

Solutions

Expert Solution

  • Requirement [a]

Ending Inventory using conventional retail inventory method, at lower of cost or market

$          57,218.00

  • Working

Cost

Retail

Cost to Retail Ratio

Working

Beginning Inventory

$          51,800.00

$          76,700.00

Plus: Purchases

$        241,978.00

$        424,300.00

Purchase Returns

$          (5,400.00)

$          (8,100.00)

           Freight In

$          16,500.00

           Net Markups

$             6,900.00

$        304,878.00

$        499,800.00

Less: Net MarkDowns

$             3,500.00

Goods Available for sale

$        304,878.00

$        496,300.00

Cost to retail Percentage

61.00%

( 304878 / 499800 ) x 100

Less: Normal Breakage

$                         -  

$             9,900.00

Less: Net Sales

$        392,600.00

Estimated ending inventory at retail

$          93,800.00

496300 - 392600

Estimated ending Inventory at cost

$          57,218.00 ANSWER

93800 x 61%


Related Solutions

Crane Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements....
Crane Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2021. Inventory, October 1, 2021     At cost $50,900     At retail 78,600 Purchases (exclusive of freight and returns)     At cost 270,540     At retail 426,400 Freight-in 16,900 Purchase returns     At cost 5,700     At retail 7,900 Markups 8,900 Markup cancellations 2,000 Markdowns (net) 3,500 Normal spoilage and breakage 10,000 Sales revenue 384,700 (a) Using...
Marigold Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements....
Marigold Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2018. Inventory, October 1, 2018     At cost $52,000     At retail 79,300 Purchases (exclusive of freight and returns)     At cost 264,822     At retail 418,300 Freight-in 16,500 Purchase returns     At cost 5,500     At retail 8,100 Markups 9,200 Markup cancellations 2,000 Markdowns (net) 3,600 Normal spoilage and breakage 10,000 Sales revenue 395,800 (a) Using...
Tangor Inc. uses the conventional retail inventory method to estimate ending inventory for its monthly financial statements.
  Tangor Inc. uses the conventional retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2018.                                                                                 At Cost             At Retail       Inventory, 10/1/18                                             52,000             78,000       Freight in                                                          16,600       Markdowns (net)                                                                        3,600                  Markups                                                                                    9,000       Markup cancellations                                                               2,000       Purchases                                                       272,000           423,000       Sales                                                                                      385,000       Purchase returns                                                 5,600             8,000       Normal spoilage and breakage                                               10,000       Employee...
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial...
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March 2021: Cost Retail Beginning inventory $ 52,000 $ 72,000 Purchases 219,000 412,000 Freight-in 19,470 Purchase returns 5,500 8,000 Net markups 7,000 Net markdowns 4,700 Normal breakage 8,000 Net sales 292,000 Employee discounts 3,000 Sales are recorded net of employee discounts. Required: 1. Compute estimated ending inventory and cost...
The XYZ Company uses the conventional retail inventory method to estimate ending inventory for its monthly...
The XYZ Company uses the conventional retail inventory method to estimate ending inventory for its monthly financial statements and presents the following data for one department for February 2020. Present a schedule that shows the ending inventory at cost and highlight that cell with color and a thick outside border. Label each column and row clearly so your workpaper can be used by other people in Marquette's accounting department. Present the cost to retail percentage as a percentage with two...
Brandon Shoe Store uses the retail inventory method to estimate its monthly ending inventories. The following...
Brandon Shoe Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available at November 30, 2021: Women’s Shoes Men’s Shoes Cost Retail Cost Retail Beginning inventory $276,000 $424,000 $191,000 $323,000 Purchases 1,181,000 1,801,000 1,046,000 1,772,000 Purchase returns and allowances 24,600 37,000 21,900 36,400 Freight in 6,000 7,200 Sales 1,826,000 1,651,000 Sales returns and allowances 28,000 25,000 At November 30, Brandon Shoe Store takes a physical inventory count at retail. The actual retail values...
Noa Corporations uses the retail inventory method to estimate its ending inventory. The following information relates...
Noa Corporations uses the retail inventory method to estimate its ending inventory. The following information relates to Noa Corporation’s inventory at both cost and retail for the current year. Description Cost Retail Beginning Inventory $55,000 $78,500 Purchases 250,000 325,000 Purchase discount 10,000 Freight-In 5,000 Additional markups 24,000 Markup cancellations 7,000 Markdowns 12,000 Markdown cancellations 3,500 Sales 400,000 Instructions: Answer each of the following questions. What is the ending inventory at retail? If the ending inventory is to be valued at...
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...
Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory...
Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the quarter ending September 30, 2018: Cost Retail Beginning inventory $ 410,000 $ 545,000 Net purchases 910,000 1,320,000 Freight-in 44,400 Net markups 59,000 Net markdowns 29,000 Net sales 1,255,000 Estimate ending inventory and cost of goods sold (average cost).
Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory...
Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2021: Cost Retail Beginning inventory $ 20,200 $ 39,800 Net purchases 10,100 ? Net markups 4,800 Net markdowns 1,800 Net sales ? The company used the average cost flow method and estimated inventory at the end of September to be $15,200.50. If the company had used the LIFO cost...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT