Old Rose Company's pricing structure has been established to yield a gross margin of 30%. The following data pertain to the year ended December 31, 2019: Sales - P2,200,000 Inventory, January 1 2019 - 1,000,000 Purchases - P800,000 Freight cost on purchases - P20,000 Freight cost on merchandise sold - P30,000 Inventory inside the company's warehouse, per actual account on December 31, 2019 - P160,000 Credit Memo issued to customers for goods returned and received - P50,000 Credit memos issued to customers for merchandise to be returned, January 2, 2020 - P40,000 Sales Discount - P100,000 Old Rose Company is satisfied that all sales and purchases have been fully and properly recorded. REQUIRED: How much would Old Rose Company reasonably estimate as a shortage in inventory at December 31, 2019?
Old Rose Company's pricing structure has been established to yield a gross margin of 30%. The following data pertain to the year ended December 31, 2019: Sales - P2,200,000 Inventory, January 1 2019 - 1,000,000 Purchases - P800,000 Freight cost on purchases - P20,000 Freight cost on merchandise sold - P30,000 Inventory inside the company's warehouse, per actual account on December 31, 2019 - P160,000 Credit Memo issued to customers for goods returned and received - P50,000 Credit memos issued to customers for merchandise to be returned, January 2, 2020 - P40,000 Sales Discount - P100,000 Old Rose Company is satisfied that all sales and purchases have been fully and properly recorded. REQUIRED: How much would Old Rose Company reasonably estimate as a shortage in inventory at December 31, 2019?
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 67P
Related questions
Topic Video
Question
Old Rose Company's pricing structure has been established to yield a gross margin of 30%. The following data pertain to the year ended December 31, 2019:
Sales - P2,200,000
Inventory, January 1 2019 - 1,000,000
Purchases - P800,000
Freight cost on purchases - P20,000
Freight cost on merchandise sold - P30,000
Inventory inside the company's warehouse, per actual account on December 31, 2019 - P160,000
Credit Memo issued to customers for goods returned and received - P50,000
Credit memos issued to customers for merchandise to be returned, January 2, 2020 - P40,000
Sales Discount - P100,000
Old Rose Company is satisfied that all sales and purchases have been fully and properly recorded.
REQUIRED:
How much would Old Rose Company reasonably estimate as a shortage in inventory at December 31, 2019?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT