Saved Help Save & CI Exercise 9-18 Retail inventory method; solving for unknowns

Question

Saved Help Save & CI Exercise 9-18 Retail inventory method; solving for unknowns [L09-3] 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 2018: Beginning inventory Net purchases Net markups Net markdowns Net sales $27,200 $40, 800 13, 600 4, 900 1,900 The company used the average cost flow method and estimated inventory at the end of September to be $2412000. If the company had used the LIFO cost flow method, the cost-to-retail percentage would have been 50%. Required: Compute net purchases at retail and net sales for the month of September. Net purchases at retail Net sales 24,200 S 43,800

Explanation / Answer

1)calculation of net purchases

cost to retail percentage (LIFO)=50% Given

cost of (opening inventory+purchases)

   which is arrived at= -----------------------------------------------------

ratail (opening+purchases+nat mark up-net mark downs)

i.e 50%=27200+13600/(40800+x+4900-1900)

? x =24200

?    note :x=net puchases (retail)

? 2)calculation net Sales

particulars cost $ ratail $ opening inventory 27200 40800 +net purchases 13600 24200 +net mark up 4900 -net marked down (1900) -ending inventory (24120)   ? net sales 43880

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