Manji Exercise 6-12 Estimating ending inventory-gross profit method LO6On January 1, The Parts Store had a $430,000 inventory at cost. During the first quarter of the year, it purchased $1,570,000 ofmerchandise, returned $22,100, and paid freight charges on purchased merchandise totalling $36,600. During the past several years,the store's gross profit on sales has averaged 30%. Under the assumption the store had $1,980,000 of sales during the first quarter ofthe year, use the gross profit method to estimate its inventory at the end of the first quarter.Ending inventory

Step 1: Cost of goods available for salePurchases$1,570,000Deduct: Purchase returns and allowances…

Answered: Exercise 6-12 Estimating ending…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.16E

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Communication Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Sales April 16,000 units May 16,000 June 20,000 July 24,000 August 28,000 September 28,000 October 18,000 November 10,000 December 8,000 Total units 168,000 Total sales 10,000,000 The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.
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Exercise 9-19 Presented below is information related to Flint Corporation for the current year. Beginning inventory $ 600,900 Purchases 1,523,000 Total goods available for sale $2,123,900 Sales revenue 2,435,000 Compute the ending inventory, assuming that (a) gross profit is 45% of sales, (b) gross profit is 60% of cost, (c) gross profit is 36% of sales, and (d) gross profit is 25% of cost. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answers to 0 decimal places, e.g. 28,987.) Ending Inventory (a) Gross profit is 45% of sales (b) Gross profit is 60% of cost (c) Gross profit is 36% of sales (d) Gross profit is 25% of cost
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Exercise 8.2 The Alpenrose Milk Company reported the following transactions which affected its merchandise inventory during the month of March: March 1 March 8 Inventory on hand- 3,000 units; cost $8.00 each. Purchased 5,000 units for $8.40 each. Sold 4,000 units for $14.00 each. Purchased 8,000 units for $8.60 each. Sold 7,000 units for $14.00 each. March 14 March 18 March 25 Required: Determine the inventory balance Alpenrose would report on its March 31 balance sheet and the cost of goods sold it would report on its March income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) - periodic and perpetual 2. Last-in, first-out (LIFO) - periodic 3. Average cost - periodic (weighted) and perpetual (moving)
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Question 3 Seasons Limited would like to estimate the month end inventory by using the sales revenue earned during the month. It has the following sales and purchases information for the month of September to consider. Inventory, 1 September $500,000 Purchase 1,300,000 Freight-in 50,000 2,100,000 40,000 Sales Sales returns Purchase discounts 90,000 3 Required: (a) Compute the estimated inventory at 30 September, assuming the gross profit on selling price is 30%. (b) Compute the estimated inventory at 30 September, assuming the percentage mark up on cost is 33.33%.

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