BuyFind

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756
BuyFind

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

Solutions

Chapter
Section
Chapter 13, Problem 9SPB
Textbook Problem

RETAIL INVENTORY METHOD The following information is provided by Beverly’s Basket Corner for the last quarter of its fiscal year ending on March 31, 20--:

Chapter 13, Problem 9SPB, RETAIL INVENTORY METHOD The following information is provided by Beverlys Basket Corner for the last

REQUIRED

  1. 1. Estimate the ending inventory as of March 31 using the retail inventory method.
  2. 2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.

Expert Solution

Requirement 1 & 2.

To determine

Estimate the amount of ending inventory and the cost of goods sold for the time period as of March 31 using the retail inventory method.

Explanation of Solution

Retail inventory method: This method is like a gross profit method. It is depends on the relationship between cost and selling price of the product , for the purpose of estimate the value of ending inventory and cost of goods sold.

In simple, retail inventory method is to estimate the amount of ending inventory by subtracting sales from the goods available for sale. It is liable to provide more accurate estimate compare to the gross profit method.

Estimate the amount of ending inventory and the cost of goods sold for the time period as of March 31 using the retail inventory method:

Retail Inventory Method
DetailsCost ($)Retail ($)
Beginning inventory, January 1, 20--32,00052,000
Add:  Net purchase during period176,000268,000
Goods available for sale208,000320,000
Less: Net sales for the period (260,000)
Estimated ending inventory at retail $60,000
        Estimated ending inventory at cost(39,000) 
Estimated cost of goods sold$169,000 

Table (1)

Working notes:

Calculate cost-to-retail percentage:

Cost-to-retail percentage }(Goods available for sale at costGoods available for sale at retail<

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Chapter 13 Solutions

College Accounting, Chapters 1-27
Show all chapter solutions
Ch. 13 - LO1 If the ending inventory is overstated by...Ch. 13 - Using the following information, compute the...Ch. 13 - Use the following information to compute cost of...Ch. 13 - Kulsrud Company would like to estimate the current...Ch. 13 - What financial statements are affected by an error...Ch. 13 - What is the main difference between the periodic...Ch. 13 - Is a physical inventory necessary under the...Ch. 13 - Is a physical inventory necessary under the...Ch. 13 - In a period of rising prices, which inventory...Ch. 13 - What two factors are taken into account by the...Ch. 13 - Which inventory method always follows the actual...Ch. 13 - When lower-of-cost-or-market is assigned to the...Ch. 13 - List the three steps followed under the gross...Ch. 13 - List the five steps followed under the retail...Ch. 13 - INVENTORY ERRORS Assume that in year 1, the ending...Ch. 13 - JOURNAL ENTRIESPERIODIC INVENTORY Paul Nasipak...Ch. 13 - JOURNAL ENTRIESPERPETUAL INVENTORY Joan Ziemba...Ch. 13 - ENDING INVENTORY COSTS Sandy Chen owns a small...Ch. 13 - LOWER-OF-COST-OR-MARKET Stalberg Companys...Ch. 13 - SPECIFIC IDENTIFICATION, FIFO, LIFO, AND...Ch. 13 - COST ALLOCATION AND LOWER-OF-COST-OR-MARKET...Ch. 13 - GROSS PROFIT METHOD A fire completely destroyed...Ch. 13 - RETAIL INVENTORY METHOD The following information...Ch. 13 - INVENTORY ERRORS Assume that in year 1, the ending...Ch. 13 - JOURNAL ENTRIESPERIODIC INVENTORY Amy Douglas owns...Ch. 13 - JOURNAL ENTRIESPERPETUAL INVENTORY Doreen Woods...Ch. 13 - ENDING INVENTORY COSTS Danny Steele owns a small...Ch. 13 - LOWER-OF-COST-OR-MARKET Bouie Companys beginning...Ch. 13 - SPECIFIC IDENTIFICATION, FIFO, LIFO, AND...Ch. 13 - COST ALLOCATION AND LOWER-OF-COST-OR-MARKET Hall...Ch. 13 - GROSS PROFIT METHOD A flood completely destroyed...Ch. 13 - RETAIL INVENTORY METHOD The following information...Ch. 13 - Hurst Companys beginning inventory and purchases...Ch. 13 - Bhushan Company has been using LIFO for inventory...

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