Toyland wishes to produce quarterly financial statements, but it takes a physica

Question

Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory
only at year-end. The following historical data were taken from the 2016 and 2017 accounting records:

Cost of goods sold. (Use average cost of goods sold percentage.) (Round your intermediate percentage values to 2 decimal places and final answers to nearest whole dollar amount.)

Inventory shortage

Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory
only at year-end. The following historical data were taken from the 2016 and 2017 accounting records:

Explanation / Answer

2016 2017 Total Net Sales 1,52,000 1,85,000 3,37,000 Less: COGS 67,900 80,380 1,48,280 Gross Profit 84,100 1,04,620 1,88,720 COGS as % of Sales 44.67% 43.45% 44.00% (COGS/Sales) (COGS/Sales) (COGS/Sales) Results of Q1 2018: Sales 2,40,000 Purchases 1,59,000 Beginning inventory 1/1/2018 63,300 Ending inventory 3/31/2018 96,700 Calculation of COGS for Q1: Beginning inventory 1/1/2018 63,300 Add: Purchases 1,59,000 Total Available Goods 2,22,300 Less: Ending inventory 3/31/2018 96,700 Cost of Goods Sold 1,25,600 Sales 2,40,000 Cost of Goods Sold 1,25,600 Gross Profit 1,14,400 A Estimated COGS for Q1: Sales 2,40,000 COGS as % of Sales 44.00% Estimated COGS 1,05,600 B Actual COGS 1,25,600 Estimated COGS 1,05,600 Excess COGS than Estimated 20,000 Ending inventory 3/31/2018 96,700 Add: Excess COGS Used 20,000 Ending inventory 3/31/2018-Estim 1,16,700 C Ending inventory 3/31/2018-Actual 96,700 Ending inventory 3/31/2018-Estim 1,16,700 Inventory Shortage 20,000

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