GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
9th Edition
ISBN: 9781260089042
Author: J. David Spiceland
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 9, Problem 9.17E
Conventional retail method; employee discounts
• LO9–3, LO9–4
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March 2018:
| Cost | Retail | |
| Beginning inventory | $ 40,000 | $ 60,000 |
| Purchases | 207,000 | 400,000 |
| Freight-in | 14,488 | |
| Purchase returns | 4,000 | 6,000 |
| Net markups | 5,800 | |
| Net markdowns | 3,500 | |
| Normal breakage | 6,000 | |
| Net sales | 280,000 | |
| Employee discounts | 1,800 |
Sales are recorded net of employee discounts.
Required:
1. Compute estimated ending inventory and cost of goods sold for March applying the conventional retail method.
2. Recompute the cost-to-retail percentage using the average cost method.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
View Policies
Current Attempt in Progress
Sheffield Limited uses the average cost formula in a perpetual inventory system. Fill in the missing amounts for items [1] to [13]in the
following perpetual inventory schedule. (Round per unit cost and total cost to 2 decimal places, e.g. 15.23.)
Purchases
Date
Units
Cost
Total
Units
Cost
April
1
6
29
[1] $
$5,742
26
[5] $
14
[10]
$201
$2,211
eTextbook and Media
Save for Later
Attempts: 0 of 3 used
Submit Answer
Required Information
Exercise 9-17 (Algo) Conventional and average cost retail methods; employee discounts [LO9-3, 9-4]
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial
statements. The following data pertain to one of its largest departments for the month of March 2021:
Cost
Retail
$ 55,000 $ 75,000
222,000
22,680
7,000
Beginning inventory
Purchases
415,000
Freight-in
Purchase returns
9,500
Net markups
Net markdowns
7,300
5,000
9,500
295,000
1,700
Normal breakage
Net sales
Employee discounts
Sales are recorded net of employee discounts.
Exercise 9-17 (Algo) Part 2
2. Recompute the cost-to-retail percentage using the average cost method. (Round your percentage answer to 2 decimal places (
0.1234 should be entered as 12.34%).)
Cost-to-retail percentage.
!
Required information
LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial
statements. The following data pertain to one of its largest departments for the month of March 2021:
Beginning inventory
Purchases
Freight-in
Purchase returns
Net markups
Net markdowns
Normal breakage
Net sales.
Employee discounts
Cost
Retail
$50,000 $ 70,000
217,000 410,000
10,986
4,500
Cost-to-retail percentage
7,000
6,800
4,500
7,000
Sales are recorded net of employee discounts.
290,000
2,800
2. Recompute the cost-to-retail percentage using the average cost method. (Round your percentage answer to 2 decimal places (i.e.,
0.1234 should be entered as 12.34%).)
%
Chapter 9 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - It is discovered in 2018 that ending inventory in...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Dollar-value LIFO retail LO95 This exercise is a...Ch. 9 - Change i n inventory costing methods LO96 In...Ch. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Inventory error LO97 In 2018, Winslow...Ch. 9 - Inventory error LO97 Refer to the situation...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or net realizable value LO91 Tatum...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.12ECh. 9 - Retail inventory method; average cost LO93 San...Ch. 9 - Prob. 9.14ECh. 9 - Retail inventory method; LIFO LO93 Crosby Company...Ch. 9 - Prob. 9.16ECh. 9 - Conventional retail method; employee discounts ...Ch. 9 - Retail inventory method; solving for unknowns ...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Prob. 9.20ECh. 9 - Dollar-value LIFO retail LO95 Lance-Hefner...Ch. 9 - Prob. 9.22ECh. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Prob. 9.24ECh. 9 - Error correction; inventory error LO97 During...Ch. 9 - Prob. 9.26ECh. 9 - Inventory error LO97 In 2018, the internal...Ch. 9 - Inventory errors LO97 In 2018, the controller of...Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.30ECh. 9 - Prob. 9.31ECh. 9 - Lower of cost or net realizable value LO91 Decker...Ch. 9 - Prob. 9.2PCh. 9 - Lower of cost or market LO91 Forester Company has...Ch. 9 - Prob. 9.4PCh. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Retail inventory method; conventional and LIFO ...Ch. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Dollar-value LIFO retail method LO95 [This is a...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Prob. 9.14PCh. 9 - Inventory errors LO97 You have been hired as the...Ch. 9 - Inventory errors LO97 The December 31, 2018,...Ch. 9 - Integrating problem; Chapters 8 and 9; inventory...Ch. 9 - Purchase commitments Appendix In November 2018,...Ch. 9 - Judgment Case 91 Inventoriable costs; lower of...Ch. 9 - Integrating Case 93 FIFO and lower of cost or net...Ch. 9 - Prob. 9.4BYPCh. 9 - Prob. 9.5BYPCh. 9 - Prob. 9.6BYPCh. 9 - Prob. 9.7BYPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9BYPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Ethics Case 911 Overstatement of ending inventory ...Ch. 9 - Analysis Case 912 Purchase commitments Appendix...Ch. 9 - Continuing Cases Target Case LO93, LO94, LO95...Ch. 9 - Prob. 1CCIFRS
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
- MC42 The following data is available for Corona Trading: Cost P 47,075 213,327 3,400 Retail P 70,025 306,375 Inventory, January 1 Purchases (net) Freight in Sales Additional markups Cancellation of additional markups 320,500 18,900 7,800 10,640 Markdowns Physical inventory, December 31, at retail 39,390 Corona Trading uses the average retail method. What is the cost of goods sold before loss on inventory shortage? P248,355 P231,798 P225,175 P224,350 a. b. с. d.arrow_forwardRequired: 1. Compute estimated ending inventory and cost of goods sold for March applying the conventional retail method. 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. Beginning inventory Purchases Freight-in Purchase returns Net markups Net markdowns Goods available for sale Cost-to-retail percentage (conventional retail method) Normal breakage Net sales: Sales Employee discounts Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold $ Cost 54,000 $ 221,000 18,358 293,358 $ Retail 74,000 414,000 7,200 495,200 495,200 495,200 Cost-to-Retail Ratio %arrow_forwardCost Retail Inventory, 12/31/25 $254,700 $397,600 Purchases 1,002,796 1,454,100 Purchase returns 59,600 80,100 Purchase discounts 17,900 Gross sales revenue - Sales returns 1,423,100 95,600 Markups 119,500 Markup cancellations Markdowns Markdown cancellations 40,500 44,300 20,200 Freight-in 41,400 Employee discounts granted 8,000 Loss from breakage (normal) 4,200 Assuming that Cheyenne Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2026. Ending inventory using the conventional retail inventory method $ 31158arrow_forward
- Problem 4 Retail Inventory Method. The Times Company uses the relnil inventen method. The following information relates to 20XS: Cost P 29,000 140,000 3,000 5,000 20.000 Retail Inventory, January I Pureliases (gross price) Purchases discounts taken P 45,000 190,000 Purchases returns 8,000 Freight-in Employee discounts Additional markups Markup cancellations Markdowns Markdown cancellations Sales 3,000 50.000 10,000 15,000 3,000 190,000 Required: Compute the cost of the ending inventory under each of the following cost flow assumptions: 1. FIFO 2. Average cost 3. Lower of cost or market (based on average cost)arrow_forward1 Birch Company began operations on 1/1/23. At 12/31/23, the following data were available: Inventory, 1/1/23 Markdowns Markups Markdown cancellations Markup cancellations Purchases At Retail 328,500 105,000 126,000 60,000 30,000 779,400 1,062,000 1,012,500 Sales Purchase returns Sales returns Employee discounts At Cost 223,500 9 10 11 12 13 14 15 16 17 Compute the ending inventory at cost at 12/31/23 using the conventional retail inventory method. Your solution should be 18 in good form with amounts clearly labeled. H 12,000 16,500 30,000 6,500 19 20 What adjustment will Birch need to make to apply the LCOM rule to its ending inventory for balance sheet presentation? 21 22 23arrow_forwardAccount Cost of goods sold Inventory Multiple Choice What is the average number of days to sell inventory for Company Y? Note: Do not round your intermediate calculations. Use 365 days in a year. O 37.1 55.5 42.6 Company X $4,630,000 $ 704,000 9.9 Company Y $9,332,500 $ 947,000 Company Z $7,138,000 $ 833,600arrow_forward
- Exerolse 2 Retail Inventory Meilhnd: Average LCM. A department store's accounts. showed the following ai'ıhe end of the period (in 000's): At Retail P160 AI Cost P120 Beginning inventory Purchases 270 340 430 Sales 60 Markdowns Markdown cancellations Additional markups Additionnl markup cancellations 10 120 20 Using the above data, apply the retail inventory method to compute the approximate average cost (1.CM) for the ending inventory.arrow_forwardPurchases Sales April 1 (balance on hand) 100@R$5.00 ||April 5 300 4 400 @ 5.10 12 200 11 300 @ 5.30 27 800 18 200 @ 5.35 28|150| 26 600 @ 5.60 30 200@ 5.80 Instructions (a). Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (Carry unit costs to the nearest cent.) (1). First-in, first-out (FIFO). (i). Average-cost. (b). If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in 1, and 2 above? (Carry average unit costs to four decimal places.)arrow_forwardQuestion 9 of 13 > 0/1 Larkspur, Inc. uses a periodic inventory system and reports the following for the month of June. Unit Date Explanation Units Cost Total Cost June 1 Inventory 130 $5 $ 650 12 Purchase 340 6 2,040 23 Purchase 200 1,400 30 Inventory 203 (a) X Your answer is incorrect. Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round per unit cost to 3 decimal places, e.g. 15.647 and final answers to 0 decimal places, e.g. 5,125.) FIFO LIFO Average-cost Cost of the ending inventory 2$ 1640 1310 $ 1464 Cost of goods sold 2$ 2630 2$ 2960 2$ 2806arrow_forward
- TASK #4 Dollar-value LIFO-retail method. Plank Co. uses the retail inventory method. The following information is available for the current year. Beginning inventory Purchases Freight-in Employee discounts Net markups Net markdowns Sales revenue Retail $488,000 1,660,000 Cost $312,000 1,180,000 20,000 8,000 60,000 80,000 1,560,000 Instructions 1. Determine the approximate valuation of the final inventory by the dollar-value, LIFO-retail method when the index was 100, and that the index at year end is 112. Label all figures. 2. Determine the approximate cost of goods sold at year-end.arrow_forwardBeginning inventory $ 97,000 $ 187,000 Purchases 363,000 587,000 Freight-in 9,700 Purchase returns 7,700 11,700 Net markups 16,700 Net markdowns 12,700 Normal spoilage 3,700 Abnormal spoilage 5,546 8,700 Sales 547,000 Sales returns 10,700 The company records sales net of employee discounts. Discounts for 2018 totaled $4,700. Required:1. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application.2. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the conventional application. Estimated ending inventory at retail Average cost application=?? my answer was 212200 but is marked wrong coventional application?? Estimated ending inventory at cost Average cost application=?? coventional application?? Estimated cost of goods sold Average cost…arrow_forwardManagement of Inventory 9.22 (1) What is the total annual cost of the existing inventory policy? (ii) How much money would be saved by employing the economic order quantity (EOQ) ? [Ans. (1) 65,063 (including cost of boxes); (ii) 62.50 or say 63] 8. Ace Ltd. Manufactures a product and the following particulars are collected for the year ended March, 2011: 1000 Units Monthly demand *100 $ Cost of placing an order 15 per unit Annual carring cost 50 units per weak Normal usage 25 units per week Minimum usage Maximum usage 75 units per week 4-6 weeks Re-order period You are required to calculate : (i) Re-order quantity ) Re-order level (iii) Minimum level (iv) Maximum level (v) Average stock level. [Ans. (i) 186 units, (ii) 450 units; (iii) 200 units; (iv) 536 units; (v) 368 units, or 293 units]arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License