San Lorenzo General Store uses a periodic inventory system and the retail invent

Question

San Lorenzo General Store 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 October 2016 Cost Retail Beginning inventory$45,000 $60,000 18,580 32,600 2,200 1,300 42,000 Net purchases Net markups Net markdowns Net sales Required Complete the table below to estimate the average cost of ending inventory and cost of goods sold for October ost-to-Retail Ratio Cost Retail Beginning inventory Plus: Net purchases Net markups Less: Net markdowns Goods available for sale Cost-to-retail percentage Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Explanation / Answer

Solution : ( Amount in $)

Plus : Net Purchases

0

2,200

Explanation :

Estimated ending inventory at cost = 51,500 * 0.68 = 35,020

Estimated cost of goods sold = 63,580 - 35,020 = 28,560

Particulars Cost Retail Cost-to-retail ratio Beginning inventory 45,000 60,000

Plus : Net Purchases

18,580 32,600 Net Markups

0

2,200

Less : Net Markdowns 0 1,300 Goods available for sale 63,580 93,500 Cost-to-retail percentage 63,580 / 93,500 = 0.68 Less : Net sales 42,000 Estimated ending inventory at retail 51,500 Estimated ending inventory at cost 35,020 Estimated cost of goods sold 28,560

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