P9-4 sparrow company uses the retail inventory method to estimate ending invento
ID: 2475371 • Letter: P
Question
P9-4
sparrow company uses the retail inventory method to estimate ending inventory and cost of goods sold. data for 2016 are as follows
cost retail
begining inventory 90,000 180,000
purchases 355,000 580,000
frieght 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
ssales returns 10,000
the company records sales net of employee discounts. Discounts for 2016 totaled 4,000
Required
estimate sparrows ending inventory and cost of goods sold for the year using the retail inventory method and the following aplications:
1. Average cost
2. Conventional
Explanation / Answer
2.
1 Calculation of cost of ending inventory and cost of goods sold using average cost is as under: 2016 Cost Retail Beginning Inventory $90,000 $ 180,000 Purchases $ 355,000 $ 580,000 Less: Purchase returns $ (7,000) $ (11,000) Add: Freight In $ 9,000 $ - Total $ 447,000 $ 749,000 Net Mark up: $ 16,000 Abnormal spoilage $ (4,800) $ (8,000) Less: Net mark down $(12,000) Goods available for sale $ 442,200 $745,000 Less: Net sales to customers $ (530,000) Employee discount $ (4,000) Normal shortage $ (3,000) Ending inventory $ 208,000 Cost to retail percentage $442,200/$745,000 59.36% Cost of ending inventory 59.36% of $208,000 $123,460 Cost of goods sold Sales $ 530,000 Cost of goods sold 59.36% of $530000 $314,585Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.