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Problem 14-7

This document contains information about inventory costs and retail values for two different periods. For the first period, the beginning inventory at cost was $650,000 and at retail was $1,200,000. Various purchases, returns, allowances and transfers resulted in a Gross Average Stock of $9,600,000 at cost and $15-16 million at retail. The ending inventory was estimated to be $2.4-2.56 million at cost. For the second period, beginning inventory was $500,000 at cost and $770,000 at retail. Purchases, returns, discounts and transfers resulted in a Gross Average Stock of $3,570,000 at cost and $4.

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Angelita Dela cruz
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249 views

Problem 14-7

This document contains information about inventory costs and retail values for two different periods. For the first period, the beginning inventory at cost was $650,000 and at retail was $1,200,000. Various purchases, returns, allowances and transfers resulted in a Gross Average Stock of $9,600,000 at cost and $15-16 million at retail. The ending inventory was estimated to be $2.4-2.56 million at cost. For the second period, beginning inventory was $500,000 at cost and $770,000 at retail. Purchases, returns, discounts and transfers resulted in a Gross Average Stock of $3,570,000 at cost and $4.

Uploaded by

Angelita Dela cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem 14-7

Cost Retail

Beginning Inventory 650,000 1,200,000

Purchase 9,000,000 14,700,000

Purchase returns (300,000) (500,000)

Purchase allowances (150,000)

Freight -in 200,000

Departmental transfer in 200,000 300,000

Net Markup _____________ 300,000

GAS - Conservative 9,600,000 16,000,000

Cost ratio (9,600,000 / 16,000,000) = 0.60

Markdown 1,000,000

GAS - Average 9,600,000 15,000,000

Cost ratio (9,600,000/ 15,000,000) = 0. 64

Less: Sales 9,500,00

Employee discount 500,000

Estimated normal shoplifting losses 600,000

Estimated normal shrinkage 400,000 11,000,000

Ending inventory at retail 4,000,000

Conservative cost ( 4,000,000 x 0.60) A. 2,400,000

Average cost (4,000,000 x 0.64) A. 2,560,000


Problem 14-8

Cost Retail

Beginning Inventory 500,000 770,000

Purchase 3,070,00 4,700,000

Transportation -in 70,000

Purchase discount ( 45,000 )

Purchase returns (25,000 ) (40,000)

Markup 100,00

___________________
Cancellation of Mark up _ (30,000)

GAS - Conservative 3,570,000 5,100,000

Cost ratio (3,570,000 / 5,100,000 )= 0.70

Markdown 350,000

Cancellation Markdown ___________________ 10,000

GAS - Average 3,570,000 4,760,000

Cost ratio (3,570,000/ 4,760,000 ) = 0.75

Less : Sales 4,000,000

Sales returns (80,000) 3,920,000

Ending Inventory at retail ________________ 840,000

Conservative cost 840,000 x 0.70 B. 588,000

Average cost 840,000 x 0.75 C. 630,000

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