Test 3 Foider-ACCT 21 x ) M Ch. 9 Homework e conect Int Ch. 9 Homework Questio 3

Question

Test 3 Foider-ACCT 21 x ) M Ch. 9 Homework e conect Int Ch. 9 Homework Questio 3. 10.00 points Crosby Company owns a chain of hardware stores throughout the state The company uses a periodic wentory system and the retail inventory method to estimate ending inventory and cost of goods sold The tollowing data are available for the three months ending March 31, 2016 Cost Retail Net purchases Net markups Net markdowns Net sales Beginning inventory $270,000 $366,000 672,000 939.000 24,000 3,000 920,000 Required Complete the table below to estimate the LIFO cost of ending invertory and cost of goods sold for the s ending March 31, 2016. Assume stable retail prices during the penod Cost Beginning eventory Plus. Net purchases Net markups Less Neut markdoTIS Goods avalabile for sale (excludng beg g bog inventory Estmated ending inentory at retal Estimated endeng inventory at cost Estiemated cost of goods sold TOSHIBA esc 2 4 5

Explanation / Answer

*Estimated cost of goods sold =

Goods available for sale - Estimated ending inventory 942,000 - 298,640

643,360   

Cost Retail Cost-to-Retail ratio Beginning inventory 270,000 366,000 73.8 Plus: Net purchases 672,000 939,000 71.6 Net markups 24000 Less: Net markdowns -3000 Goods available for sale(excluding beginning inventory) 672,000 960000 Goods available for sale(including beginning inventory) 942,000 1,326,000 Cost to retail percentage Beginning inventory(270,000/366,000 *100) = 73.8% New purchase(672,000 / 939,000 *100) = 71.6% Less: Net sales 920000 Estimated ending inventory at retail 406,000 Estimated ending inventory at cost 298,640 Estimated cost of goods sold 643,360 *Estimated ending inventory at cost Retail Cost Beginning inventory 366000 270,000 Current period's layer 40000 * 71.6%         =   28640 total 406,000 298,640

*Estimated cost of goods sold =

Goods available for sale - Estimated ending inventory 942,000 - 298,640

643,360   

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