Grand Department Store, Inc., uses the retail inventory method to estimate ending inventory for its monthlyfinancial statements. The following data pertain to a single department for the month of October 2016:Inventory, October 1, 2016:$ 20,000At costAt retail30,000Purchases (exclusive of freight and returns):At cost100,151146,495At retailFreight-inPurchase returns:5,100At cost2,1002,8002,500At retailAdditional markupsMarkup cancellationsMarkdowns (net)Normal spoilage and breakageSales2658004,500135,730Required:1. Using the conventional retail method, prepare a schedule computing estimated lower of cost and net realiz-able value inventory for October 31, 2016.2. A department store using the conventional retail inventory method estimates the cost of its ending inventoryas $29,000. An accurate physical count reveals only $22,000 of inventory at lower of cost and net realizablevalue. List the factors that may have caused the difference between computed inventory and the physicalcount.

Retail inventory method: It takes into account all the retail amounts that is, the current selling…

Answered: Grand Department Store, Inc., uses the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In its first month of operations, Bramble Corp. made three purchases of merchandise in the following sequence: (1) 240 units at $4, (2) 340 units at $6, and (3) 440 units at $7. Assuming there are 140 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Bramble Corp. uses a periodic inventory system. FIFO LIFO The Ending Inventory $Enter a dollar amount $Enter a dollar amount
Laura's Department Store uses the average cost retail inventory method to determine its ending inventory. The accounting records for the current year for Laura's contained the following information: Cost Retail Purchases $71,200 $87,750 Beginning inventory 17,000 23,500 Sales 98,000 Net markups 6,500 Net markdowns 3,000 In addition, the accounting records for Laura's disclosed that purchases returns at cost and retail were $1,950 and $4,250, respectively. What is the cost-to-retail percentage to be used for ending inventory calculations? A 76.8% B 79.8% C 78.1% D 75.1%
Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. The following are the transactions for the month of July. Units Unit Cost July 1 Beginning Inventory 2,000 $ 25 July 5 Sold 1,000 July 13 Purchased 6,000 29 July 17 Sold 3,000 July 25 Purchased 8,000 31 July 27 Sold 5,000 Calculate the cost of goods available for sale, ending inventory, and cost of goods sold if Aircard uses (a) FIFO, (b) LIFO, or (c) weighted average cost. (Round "Cost per Unit" to 2 decimal places.)
The following information is available for Sandhill Co. for three recent fiscal years. 2017 2016 2015 Inventory $562,019 $571,288 $327,592 Net sales 1,955,632 1,697,750 1,304,721 Cost of goods sold 1,522,434 1,280,731 939,086 Calculate the inventory turnover, days in inventory, and gross profit rate for 2017 and 2016. (Round inventory turnover to 1 decimal place, e.g. 5.2, days in inventory to 0 decimal places, e.g. 125 and gross profit rate to 1 decimal place, e.g. 5.2%.) 2017 2016 Inventory Turnover times times Days in Inventory days days Gross Profit Rate % %
2. Calculate January's ending inventory and cost of goods sold for the month using LIFO, periodic system.
Balamb Corporation had the following transactions for the month: Calculate the ending inventory dollar value for the period for each of the following cost allocation methods, using periodic inventory updating. Provide your calculations. first-in, first-out (FIFO) last-in, first-out (LIFO) weighted average
Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. The following are the transactions for the month of July. Units Unit Cost July 1 Beginning Inventory 2,000 $ 35 July 5 Sold 1,000 July 13 Purchased 6,000 39 July 17 Sold 3,000 July 25 Purchased 8,000 41 July 27 Sold 5,000 Calculate the cost of goods available for sale, ending inventory, and cost of goods sold if Aircard uses (a) FIFO, (b) LIFO, or (c) weighted average cost. (Round "Cost per Unit" to 2 decimal places.)\
The Reuschel Company began 2016 with inventory of 10,000 units at a cost of $7 per unit. During 2016, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000 units on hand at the end of 2016. Reuschel uses a periodic inventory system and the LIFO inventory cost method. Required: 1. Calculate cost of goods sold for 2016. 2. From a financial reporting perspective, what problem is created by the use of LIFO in this situation? Describe the disclosure required to report the effects of this problem.
Using the selected year-end account balances at December 31, 2014, for Lifeline General Store that follow, prepare a multistep 2014 income statement. Show detail of net sales. The company uses the periodic inventory system. Beginning merchandise inventory was $28,000; ending merchandise inventory is $21,000. Account Name Debit CreditSales $309,000Sales Returns and Allowances $ 15,200Purchases 114,800Purchases Returns and Allowances 7,000Freight-In 5,600Selling Expenses…
Cobb Company's accounting records show the following at the year ending on December 31, 2015: Purchase Discounts $ 11,200 Freight In 15,600 - Purchases 402,000 Beginning Inventory Ending Inventory 47,000 57,600 Purchase Returns 12,800 Using the periodic system, the cost of goods sold is O a) $404,200. O b) $378,000. $393,600. O d) $383,000.
Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Available information follows: The inventory at January 1, 2016, had a retail value of $36,000 and a cost of $29,570 based on the conventional retail method. Transactions during 2016 were as follows: Cost Retail Gross purchases $ 165,860 $ 400,000 Purchase returns 5,600 29,000 Purchase discounts 4,100 Gross sales 323,000 Sales returns 10,000 Employee discounts 3,500 Freight-in 30,000 Net markups 16,000 Net markdowns 29,000 Sales to employees are recorded net of discounts. The retail value of the December 31, 2017, inventory was $87,450, the cost-to-retail percentage for 2017 under the LIFO retail method was 67%, and the appropriate price index was 106% of the January 1, 2017, price level. The retail value of the December 31, 2018, inventory was $41,965, the cost-to-retail…
On January 1, 2015, the company had merchandise inventory of 50,000. On December 31, 2016, the company had the ff account balances: Freight In: 4,000 Purchases: 509,000 Purchase Discounts: 6,000 Purchase returns and allowances: 2000 Sales Revenue: 840,000 Sales Returns and Allowances: 10,000 Sales Discounts: 5000 The company determines an ending inventory of 60,000. Prepare the closing entries and compute the company's gross profit.

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