ACCT 301 Chapter Notes - Chapter 9: Retained Earnings, Financial Statement
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Duke Co. uses the retail inventory method to estimate endinginventory and cost of goods sold. Data for the year 2016 is asfollow:
Cost | retail | |
Beginning inventory | $140,000 | $280,000 |
Purchases | 420,000 | 690,000 |
Freight in | 16,000 | |
Purchase Returns | 12,000 | 18,000 |
Net markups | 24,000 | |
Net markdowns | 36,000 | |
Normal spiolage | 5,000 | |
Sales | 700,000 | |
Sales returns | 20,000 | |
Employees discounts | 6,000 |
The company records sales net of employee discounts.
Required:
Estimate Duke's ending inventory and cost of goods sold for theyear using the retail inventory method and the followingapplications:
1. Average Cost
2. Conventional
3. LIFO
1. What is the differencebetween inventory and cost of goods sold? Cost of goods sold andsales revenue?
2. Is gross profit an account?
3. ComstockCompany counted their inventory at the end of the year and had 220units. Included in that amount were 20 units Comstock held onconsignment from Davidson Inc. Comstock purchased 50 units ofinventory on December 27, FOB shipping point. How many units ofinventory should Comstock report on its year-end balancesheet?
4. Assume Comstock wasunable to count its ending inventory because it was destroyed in afire. Use the gross profit method to estimate the ending inventory.The gross profit rate is 52%.
Beginninginventory Endinginventory Netpurchases Net sales | $ 10,000 ? 110,000 175,000 |