Gage’s accounting records included the following information:Inventory, 01-01-15                                                                                                             $211,000Purchases during 2015                                                                                                        $805,000Purchase returns during 2015                                                                                                 $4,000Freight-out on 2015 sales                                                                                                      $10,000Sales during 2015                                                                                                              $1,662,000Sales returns during 2015                                                                                                      $60,000 Gage completed a physical inventory on 12-31-15 and calculated an ending inventory of $100,000, at retail selling price. In recent years, Gage's gross profit equaled 42% of Gage’s selling price. Gage suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items.

Question
Asked Nov 6, 2019

Gage’s accounting records included the following information:

Inventory, 01-01-15                                                                                                             $211,000

Purchases during 2015                                                                                                        $805,000

Purchase returns during 2015                                                                                                 $4,000

Freight-out on 2015 sales                                                                                                      $10,000

Sales during 2015                                                                                                              $1,662,000

Sales returns during 2015                                                                                                      $60,000

 

Gage completed a physical inventory on 12-31-15 and calculated an ending inventory of $100,000, at retail selling price. In recent years, Gage's gross profit equaled 42% of Gage’s selling price. Gage suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items.

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Estimated loss from any shoplift...

Particulars
Amount (S)
211,000
Beginning inventory
Purchase ($805,000-S4,000)
Sales (S1,662,000+$10,000)
Sales retums
801,000
1,672,000
(60,000)
1,612,000
Net sales
Gross profit ratio
Gross profit
(1,612,000*42%
Cost of goods sold
(1,612,000-677,040)
42%
677,040
934,960
Desired ending inventory
(($211,000+S801,000)
$934,960)
Ending inventory at retail
$100,000
77,040
(58,000)
Ending inventory at cost
(100,000*(100%-42%
Ending loss from any
shoplifted items
19,040
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Particulars Amount (S) 211,000 Beginning inventory Purchase ($805,000-S4,000) Sales (S1,662,000+$10,000) Sales retums 801,000 1,672,000 (60,000) 1,612,000 Net sales Gross profit ratio Gross profit (1,612,000*42% Cost of goods sold (1,612,000-677,040) 42% 677,040 934,960 Desired ending inventory (($211,000+S801,000) $934,960) Ending inventory at retail $100,000 77,040 (58,000) Ending inventory at cost (100,000*(100%-42% Ending loss from any shoplifted items 19,040

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