ade net purchases of $635,000 and had net sales of $910,000 before a fire destroyed the company's inventory. Forercent.d to estimate inventory on a regular basis.s margin method to estimate inventory on a regular basis.mate inventory cost on a regular basis is to determinethe cost of ending inventory for interim financial statements.net purchases.gross sales revenue.t Butterfly Company began October with inventory of $192,000. The business made net purchases of $635,000 and had net sales of $910,000 before a fire destroyed the company's inventory. For thepast several years, Butterfly Company's gross margin on sales has been 38 percent.Required1. Estimate the cost of the inventory destroyed by the fire2. Identify another reason owners and managers use the gross margin method to estimate inventory on a regular basisRequirement 1. Estimate the cost of the inventory destroyed by the fireCost of goods available for saleEstimated cost of goods soldLessEstimated cost of inventory destroyedRequirement 2. Identify another reason owners and managers use the gross margin method to estimato inventory on a regular basis.Another reason owners and managers use the gross margin method to estimate inventory cost on a regular basis is to determine

Gross profit is the difference between sales revenue and cost of goods sold. The cost of goods sold…

Answered: Butterfly Company began October with…

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter20: Accounting For Inventory

Section: Chapter Questions

Problem 1CP

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Similar questions

Shetland Company reported net income on the year-end financial statements of $125,000. However, errors in inventory were discovered after the reports were issued. If inventory was understated by $15,000, how much net income did the company actually earn?
Assume your company uses the periodic inventory costing method, and the inventory count left out an entire warehouse of goods that were in stock at the end of the year, with a cost value of $222,000. How will this affect your net income in the current year? How will it affect next years net income?
Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.
If Wakowski Companys ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?
A large manufacturer of truck and car tires recently changed its cost-flow assumption method for inventories at the beginning of 2014. The manufacturer has been in operation for almost 40 years, and for the last decade it has reported moderate growth in revenues. The firm changed from the LIFO method to the FIFO method and reported the following information (amounts in millions): REQUIRED Calculate the inventory turnover ratio for 2014 using the LIFO and FIFO cost-flow assumption methods. Explain why the costs assigned to inventory under LIFO at the end of 2013 and 2014 are so much less than they are under FIFO.
Last year, Nikkola Company had net sales of 2,299,500,000 and cost of goods sold of 1,755,000,000. Nikkola had the following balances: Refer to the information for Nikkola Company above. Required: Note: Round answers to one decimal place. 1. Calculate the average inventory. 2. Calculate the inventory turnover ratio. 3. Calculate the inventory turnover in days. 4. CONCEPTUAL CONNECTION Based on these ratios, does Nikkola appear to be performing well or poorly?
Young Company, a camera store, lost some inventory in a fire on December 15. To file an insurance claim, the company must estimate its December 15 inventory using the gross profit method. For the past two years, Young Company's gross profit has averaged 45% of net sales. Its inventory records reveal the following data: (Click the icon to view the data.) Read the requirements. Requirement 1. Estimate the cost of the lost inventory using the gross profit method. Add: Less: Net purchases Estimated cost of goods sold: Less: Estimated cost of goods sold Estimated cost of ending inventory lost Data table Inventory, December 1 Transactions December 1-15: Purchases Purchases discounts Purchase returns Sales Print Done $ 57,500 490,000 19,000 70,600 663,000 X Requirements 1. Estimate the cost of the lost inventory using the gross profit method. 2. Prepare the income statement for December 1 to December 15 for this product through gross profit. Show the detailed computations of cost of goods…
Lily Company needs to determine the amount of inventory in its warehouse at the time that an earthquake destroyed it. Lily's gross profit percentage averaged 27% over the last three years. Lily began the current year with inventory of $840,000. Its net purchases were $4,387,000 and net sales were $3,970,000 during the year before the earthquake occurred. Use the gross profit method to estimate the inventory on hand on the date of the earthquake. Identify the appropriate formula and then calculate Lily's estimated ending inventory. Estimated ending inventory !!
Blue Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $155,000, and purchases for January through April totaled $467,300. Sales revenue for the same period was $684,500. Blue's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Blue's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire $
Marigold Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $164,900, and purchases for January through April totaled $492,600. Sales revenue for the same period was $686,300. Marigold's normal gross profit percentage is 25% on sales. Using the gross profit method, estimate Marigold's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire
22. Assume the following information regarding a note received by HEERHUM YU Company: Principal amount of note receivable Date of note P1,500,000 October 1, 2020 120 days December 1, 2020 Term of note Date of discounting Discount rate 12% Interest income for 120 days P50,000 how much is the discount charged by bank to HEERHUM YU Company?
Indigo Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns Amount of the loss $ tA $172,400 406,400 27,100 Sales revenue Sales returns Rate of gross profit on net sales Merchandise with a selling price of $21,300 remained undamaged after the fire. Damaged merchandise with an original selling price of $14,600 had a net realizable value of $5,200. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage. $621,100 174430 22,800 30 %

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