HW_7 - Problem 9-6 Requirement 1 Cost Retail Beginning...

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Unformatted text preview: Problem 9-6 Requirement 1 Cost Retail Beginning inventory $ 20,000 $ 30,000 Plus: Purchases 100,151 146,495 Freight-in 5,100 Less: Purchase returns (2,100) (2,800) Plus: Net markups ($2,500 - 265) 2,235 175,930 $123,151 Cost-to-retail percentage: = 70% $175,930 Less: Net markdowns _______ (800 ) Goods available for sale $123,151 175,130 Less: Normal spoilage (4,500) Net sales (135,730 ) Estimated ending inventory at retail $ 34,900 Estimated ending inventory at cost (70% x $34,900) $24,430 Requirement 2 The difference between the inventory estimate per retail method and the amount per physical count may be due to: 1. Theft losses. 2. Spoilage or breakage above normal. 3. Differences in cost-to-retail percentage for purchases during the month, beginning inventory, and ending inventory. 4. Markups on goods available for sale inconsistent between cost of goods sold and ending inventory. 5. A wide variety of merchandise with varying cost-to-retail percentages. 6. Incorrect reporting of markdowns, additional markups or cancellations. Problem 9-9 Employee discounts must be deducted in the retail column. 2011: $2,400 = $3,000 2,400 = $600 = Employee discounts .80 Cost Retail Beginning inventory $28,000 $ 40,000 Plus: Net purchases 85,000 108,000 Freight-in 2,000 Net markups 10,000 Less: Net markdowns ______ (2,000 ) Goods available for sale (excluding beginning inventory) 87,000 116,000 Goods available for sale (including beginning inventory) 115,000 156,000 $ 87,000 Cost-to-retail percentage: = 75% $116,000 Less: Net sales ($100,000 + 2,400) Employee discounts (102,400) (600 ) Estimated ending inventory at current year retail prices $ 53,000 Estimated ending inventory at cost (below) (35,950) Estimated cost of goods sold $79,050 ___________________________________________________________________________ Step 1 Step 2...
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HW_7 - Problem 9-6 Requirement 1 Cost Retail Beginning...

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