Answered: 1. Your audit of DEC Company's…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 13P: Webster Company adopted do liar-value LIFO on January 1, 2019. Webster produces three products: X,...

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1. Your audit of DEC Company's inventory and related records revealed the following information: Merchandise inventory, January 1, 2019 450,000 Purchases for the year 2019 3,150,000 Sales for the year 2019 4,200,000 You conducted a physical inventory on December 31, 2019 and deterrnined 500,000 was in the company's warehouse. The company's president suspects some new employees may have pilfered a portion of the merchandise inventory. REQUIRED: Determine the estimated cost of the missing inventory, assuming DEC Company 's gross profit remained constant at: - 40% of sales - 40% of cost of sales 2. You took a physical inventory for your sole proprietorship at the close of business on July 31, 2019. The inventory totaled 205,000. You were verifying the accuracy of the inventory records at June 30, 2019, therefore you must estimate an inventory amount on that date. You find that during the period July 1 through July 31, 2019, sales were 705,000; sales returns, 18,000; gross purchases P650,000; purchase returns P12,000, freight-in 6,000. REQUIRED: What is the estimated cost of inventory on June 30, 2019 assuming that goods are sold at 20% above cost? with explanation pls

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