Assignment 168

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You want to prepare interim financial statements for the first quarter.
You wish to avoid making a physical count of inventory.
Your gross profit rate averages 35%
The following information for the first quarter is available from its records:

January 1 beginning inventory
Cost of goods purchased
Sales
Sales returns

Required
Use the gross profit method to estimate the company’s first-quarter ending inventory.
Your company’s records provide the following information for the year ended December 31:
At Cost At Retail
January 1 beginning inventory $ 4,71,350.00 $ 9,27,150.00
Cost of goods purchased 32,76,030.00 62,79,350.00
Sales 54,95,700.00
Sales returns 44,500.00

Required
1. Use the retail inventory method to estimate the company’s year-end inventory.
At Cost At Retail
January 1 beginning inventory $ 4,71,350.00 $ 9,27,150.00
Cost of goods purchased 32,76,030.00 62,79,350.00
Total 37,47,380.00 72,06,500.00
Sales 54,95,700.00
Sales returns 44,500.00
Ending inventory 9,12,756.00 17,55,300.00

Ratio of cost to retial 0.5200

2. A year-end physical inventory at retail prices yields a total inventory of $1,675,800.
Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.
Problem 3
Your company’s ending inventory includes the following items.
Compute the lower of cost or market for ending inventory:
(a) as a whole and (b) applied separately to each product.
Exhibit 6.9 is an example of how to format this problem.

Per Unit
Product Units Cost Market
Helmets 20 $52 $56
Bats 18 $76 $70
Shoes 34 $95 $91
Uniforms 42 $38 $38

Activities Cost of Units Acquired
Beginning Inventory 120 units @ $10 = $ 1,200
Sales
Purchases 280 units @ $ 15 = $ 4,200
Sales
Purchases 400 units @ $ 20 = $ 8,000
Sales
Purchases 600 units @ $ 25 = $ 15,000
Totals 1,400 units $28,400