Principles of Accounting
12th Edition
ISBN: 9781285607047
Author: NEEDLES
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 7, Problem 9AP
1.
To determine
Prepare a schedule to show the estimate of store’s month end inventory at cost using retail method.
2.
To determine
Bring down the retail value of the physical inventory at cost using cost to retail ratio.
3.
To determine
Determine the estimated amount of inventory shortage at retail and at cost.
4.
To determine
Explain the reason for which the retail method is an efficient way for these companies to operate.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You are called by Tim Duncan of Shamrock Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that
took place the night before. You suggest that an inventory be taken immediately. The following data are available.
Inventory, July 1
Purchases-goods placed in stock July 1-15
Sales revenue-goods delivered to customers (gross)
Sales returns-goods returned to stock
$36,600
81,300
119,400
Your client reports that the goods on hand on July 16 cost $31,300, but you determine that this figure includes goods of
$6,300 received on a consignment basis. Your past records show that sales are made at approximately 60% over cost. Duncan's
insurance covers only goods owned.
Claim against the insurance company $
3,600
Compute the claim against the insurance company. (Round ratios for computational purposes to 3 decimal places, e.g. 78.736% and
final answer to O decimal places, e.g. 28,987.)
LA
26700
Crosby Company owns a chain of hardware stores throughout the state. The company uses a periodic inventory system and the retail
Inventory method to estimate ending inventory and cost of goods sold. The following data are available:
Beginning inventory
Net purchases
Net markups
Net markdowns
Net sales
Required:
Complete the table below to estimate the LIFO cost of ending inventory and cost of goods sold using the information provided.
Assume stable retail prices during the period.
Beginning inventory
Net purchases
Net markups
Net markdowns
Cost
$ 160,000
607,760
Note: Round ratio calculation to 2 decimal places (i.e., 0.1234 should be entered as 12.34%.). Enter amounts to be deducted with a
minus sign.
Retail
$ 280,000
840,000
20,000
4,000
800,000
Cost-to-retail percentage (current)
Net sales
Estimated ending inventory at retail
Estimated ending inventory at cost
Estimated cost of goods sold
Goods available for sale (excluding beginning inventory)
Goods available for sale (including…
All problems can be completed manually or by using either MyAccountingLab General Ledger or QuickBooks.
Using the sales, cash receipts, and general journals
Assume Peaceful Spring Company uses the perpetual inventory system. The general ledger of Peaceful Springs Company includes the Following selected accounts, along with their account numbers:
Sales and cash receipts transactions in November were as follows:
Requirements
Use the appropriate journal to record the preceding transactions in a sales journal (omit the Invoice No. column) and a cash receipts journal (omit the Sales Discounts Forfeited column).
Total each column of the sales journal and the cash receipts journal. Determine that total debits equal total credits.
Show how postings would be made from the journals by writing the account numbers and check marks in the appropriate places in the journals.
Chapter 7 Solutions
Principles of Accounting
Ch. 7 - Prob. 1DQCh. 7 - Which of the following methods do not require a...Ch. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 1SECh. 7 - Assume the following data with regard to inventory...Ch. 7 - Prob. 3SE
Ch. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 1EACh. 7 - Prob. 2EACh. 7 - Prob. 3EACh. 7 - Prob. 4EACh. 7 - Prob. 5EACh. 7 - Prob. 6EACh. 7 - During July 2014, Micanopy, Inc., sold 500 units...Ch. 7 - Prob. 8EACh. 7 - Prob. 9EACh. 7 - Prob. 10EACh. 7 - Prob. 11EACh. 7 - Prob. 12EACh. 7 - Midori Company merchandises a single product...Ch. 7 - The inventory of Wood4Fun and data on purchases...Ch. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6APCh. 7 - DiPaolos inventory, purchases, and sales for March...Ch. 7 - Prob. 8APCh. 7 - Prob. 9APCh. 7 - Zubac Company is a large retail furniture company...Ch. 7 - Prob. 1CCh. 7 - Prob. 2CCh. 7 - ExxonMobil Corporation had net income of 41.0...Ch. 7 - Prob. 4CCh. 7 - JCPenney, a large retail company with many stores,...
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.Similar questions
- Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forwardThe following is an excerpt from a conversation between Paula Marlo, the warehouse manager for Musick Foods Wholesale Co., and its accountant, Mike Hayes. Musick Foods operates a large regional warehouse that supplies produce and other grocery products to grocery stores in smaller communities. Paula: Mike, can you explain whats going on here with these monthly statements? Mike: Sure, Paula. How can I help you? Paula: I dont understand this last-in, first-out inventory procedure. It just doesnt make sense. Mike: Well, what it means is that we assume that the last goods we receive are the first ones sold. So the inventory consists of the items we purchased first. Paula: Yes, but thats my problem. It doesnt work that way! We always distribute the oldest produce first. Some of that produce is perishable! We cant keep any of it very long or itll spoil. Mike: Paula, you dont understand. We only assume that the products we distribute are the last ones received. We dont actually have to distribute the goods in this way. Paula: I always thought that accounting was supposed to show what really happened. It all sounds like make believe to me! Why not report what really happens? Respond to Paulas concerns.arrow_forwardRecord general journal entries to correct the errors described below. Assume that the incorrect entries were posted in the same period in which the errors occurred and were recorded using the periodic inventory system. Round your answers to the nearest cent. A freight cost of $85 incurred on equipment purchased for use in the business was debited to Freight In. The issuance of a credit memo to Lang Company for $119 for merchandise returned was recorded as a debit to Purchases Returns and Allowances and a credit to Accounts Receivable, Lang Company. A cash sale of $68 to J. L. LaSalle was recorded as a sale on account. A purchase of merchandise from James Company in the amount of $750 with a 25 percent trade discount was recorded as a debit to Purchases and a credit to Accounts Payable of $750 each.arrow_forward
- The Allowance for Overvaluation account of the home office is debited:* A. When the home office ships merchandise to the branch at a billed price that exceeds cost. B. In a journal entry to close the account at the end of an accounting period. C. When the branch’s ending inventory is recorded in the home office accounting records. D. In some other circumstances.arrow_forwardCrane Inc. is a retailer operating in British Columbia. Crane uses the perpetual inventory system. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Crane Inc. for the month of January 2022. Date Description Quantity Unit Cost or Selling Price January 1 Beginning inventory 100 $12 January 5 Purchase 137 15 January 8 Sale 112 23 January 10 Sale return 10 23 January 15 Purchase 55 17 January 16 Purchase return 5 17 January 20 Sale 85 27 January 25 Purchase 17 19 Calculate the Moving-average cost per unit at January 1, 5, 8, 10, 15, 16, 20, & 25. (Round intermediate calculations to 0 decimal places and final answers to 3 decimal…arrow_forwardCrane Inc. is a retailer operating in British Columbia. Crane uses the perpetual inventory system. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Crane Inc. for the month of January 2022. Date Description Quantity Unit Cost or Selling Price January 1 Beginning inventory 100 $12 January 5 Purchase 137 15 January 8 Sale 112 23 January 10 Sale return 10 23 January 15 Purchase 55 17 January 16 Purchase return 5 17 January 20 Sale 85 27 January 25 Purchase 17 19 For each of the following cost flow assumptions, calculate cost of goods sold, ending inventory, and gross profit. (1) LIFO. (2) FIFO. (3) Moving-average cost. (Round…arrow_forward
- Concord Inc. is a retailer using a perpetual inventory system. All sales returns from customers result in the goods being returned to inventory. (Assume that the inventory is not damaged.) Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Concord Inc. for the month of January. Unit Cost or Date Description Quantity Selling Price Dec. 31 Beginning inventory 160 $21 Jan. 2 Purchase 100 22 Jan. 6 Sale 180 40 Jan 9 Sale return 10 40 Jan. 9 Purchase 75 24 Jan. 10 Purchase return 15 24 Jan. 10 Sale 50 45 Jan. 23 Purchase 100 26 Jan. 30 Sale 120 51 Using FIFO method, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (Assume sales returns had a cost of $21 and purchase returns had a cost of $24.) Cost of goods sold 2$ Ending Inventory 24 Gross Profit 24 Using Average method, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (Round average cost to 3…arrow_forwardA retailer’s physical count of inventory was higher than that shown by the perpetual records.Which of the following could explain the difference?a. Inventory items had been counted, but the tags placed on the items had not been taken off and added to the inventory accumulation sheets.b. Credit memos for several items returned by customers had not been recorded.c. No journal entry had been made on the retailer’s books for several items returned to its suppliers.d. An item purchased FOB shipping point had not arrived at the date of the inventory count and had not been reflected in the perpetual records.arrow_forwardThe company just took a physical count of inventory and found $75 worth of inventory was unaccounted for. It was either stolen or damaged. Which journal would the company use to record the correction of the error in inventory? Group of answer choices 1.sales journal 2.purchases journal 3.general journal 4.cash disbursements journalarrow_forward
- Journalize the following purchase transactions for Main Street Office Supplies using the periodic inventory system and then using the same information, journalize the purchase transactions using the perpetual inventory system. Explanations are not required. May 12 Main Street buys $167,500 worth of merchandise inventory on account with credit terms of 2/10, n/30. May 16 Main Street returns $18,600 of the merchandise to the vendor due to damage during shipment. May 21 Main Street pays the amount due.arrow_forwardWhen tracing using the cutoff information from the December 31 inventory count of Thermo-Tempur Mattresses, you note the following information: Check the below image for information. The documentation indicates that the last receiving report included in the inventory count was Receiving Report 1182. Receiving Reports 1183 and 1184 were for goods received on the company’s truck but not unloaded. Receiving report 1185 was for goods received on January 3.Required:Prepare a correcting journal entry assuming that Thermo-Tempur uses (a) a periodic inventory system and (b) a perpetual inventory system that was updated for the inventory count.arrow_forwardAssume that in an annual audit of Wildhorse Inc. at December 31, 2025, you find the following transactions near the closing date. Assuming that each of the amounts is material, state whether the merchandise should be included in the client's inventory. 1. 2. 3. 4. 5. Transactions A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2025. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2026. Merchandise costing $5,880 was received on January 3, 2026, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2025, f.o.b. destination. A packing case containing a product costing $7,140 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked "Hold for shipping instructions." Your investigation revealed…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Inventory management; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DZhHSR4_9B4;License: Standard Youtube License