Selected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Cost Retail Celebrity Tan $ 300,000 $ 575,000 Merchandise inventory, August 1 Transactions during August: Purchases (net) 3,375,000 2,149,000 Sales 3,170,000 Ranchworks Co. Merchandise inventory, March 1 $ 880,000 Transactions during March through November: Purchases (net) 9,500,000 Sales 15,800,000 Estimated gross profit rate 38% Instructions 1. Determine the estimated cost of the merchandise inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations. 2. a. Estimate the cost of the merchandise inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations. b. Assume that Ranchworks Co. took a physical inventory on November 30 and dis- covered that $369,750 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through November?

Selected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Cost Retail Celebrity Tan $ 300,000 $ 575,000 Merchandise inventory, August 1 Transactions during August: Purchases (net) 3,375,000 2,149,000 Sales 3,170,000 Ranchworks Co. Merchandise inventory, March 1 $ 880,000 Transactions during March through November: Purchases (net) 9,500,000 Sales 15,800,000 Estimated gross profit rate 38% Instructions 1. Determine the estimated cost of the merchandise inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations. 2. a. Estimate the cost of the merchandise inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations. b. Assume that Ranchworks Co. took a physical inventory on November 30 and dis- covered that $369,750 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through November?

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 7PA: Selected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks...

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