Roberson Corporation uses a periodic inventory system and the retail inventory m

Question

Roberson Corporation uses a periodic inventory system and the retail inventory method. Accounting records provided the following information for the 2018 fiscal year:

The company records sales to employees net of discounts. These discounts totaled $33,000 for the year.

Estimate ending inventory and cost of goods sold using the conventional method.

Cost Retail Beginning inventory $ 310,000 $ 580,000 Net purchases 711,000 1,270,000 Freight-in 15,200 Net markups 34,000 Net markdowns 7,000 Normal spoilage 4,000 Net sales 1,480,000

Explanation / Answer

62.26%

(1173000/1884000)

cost retail Cost-to-retail ratio Beginning inventory 310000 580000 plus: purchases 711000 1270000 freight in 15200 net markup 34000 goods available for sale 1173000 1884000 mark downs 7000 goods available for sale 1173000 1877000 Cost-to-retail percentage

62.26%

(1173000/1884000)

Less: Normal spoilage (4000) net sales (1480000) employee discount (33000) Estimated ending inventory at retail 360000 Estimated ending inventory at cost 224136 (360000*62.26%) Estimated cost of goods sold 948864

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