Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold whenpreparing monthly financial statements required by its bank. Inventory on hand at the end of July was $126,000.The following information for the month of August was available from company records:PurchasesFreight-inSalesSales returnsPurchases returns$ 226,0005,900357,0009,7005,000In addition, the controller is aware of $11,000 of inventory that was stolen during August from one of thecompany's warehouses.Required:1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 35%.2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.1. Estimated ending inventory2. Estimated ending inventory

StepsTo solve this problem, we need to use the gross profit method to estimate the ending inventory…

Answered: Henderson Company uses the gross profit…

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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On April 10, 2023, a fire damaged the office and warehouse of Sill Company. Most of the accounting records were destroyed, but the following account balances were determined as of March 31, 2023: Sales Revenue (January 1-March 31, 2023), $180,000; Purchases (January 1- March 31, 2023), $94,000. The company's fiscal year ends on December 31. It uses a periodic inventory system. From an analysis of the April bank statement, you discover cancelled checks of $4,200 for cash purchases during the period April 1-10. Deposits during the same period totaled $18,500. Of that amount, 60% were collections on accounts receivable related to sales made in prior periods, and the balance was cash sales. Correspondence with the company's principal suppliers revealed $12,400 of purchases on account from April 1 to April 10. Of that amount, $1,600 was for merchandise in transit on April 10 that was shipped FOB destination. Correspondence with the company's principal customers produced acknowledgments of…
In December 2013, JB Masterpiece Merchandise Inc. had a significant portion of its inventory stolen. The company determined the cost of inventory remaining to be $32,400. The following information was taken from the records of the company: Purchases... Purchase returns and allowances. Sales.. **** Sales returns and allowances. Salaries.... Rent. Insurance Utilities.. ..... Jan. 1, 2013 to Date of Theft $141,670 . 7,250 05: (15 Mark) 275,600 3,400 . 10,100 . 5,340 .. 1,030 .. 1,115 4,925 1,890 .. 74,620 Advertising. Depreciation expense Beginning inventory Required: Estimate the cost of the stolen inventory. 2012 $156,430 6.580 283,300 2,900 12,900 7,120 1.340 1,435 3,741 2,106 69,780
The Marchetti Soup Company entered into the following transactions during the month of June: (1) purchased inventory on account for $235,000 (assume Marchetti uses a perpetual inventory system); (2) paid $58,000 in salaries to employees for work performed during the month; (3) sold merchandise that cost $156,000 to credit customers for $290,000; (4) collected $270,000 in cash from credit customers; and (5) paid suppliers of inventory $215,000. Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero except for cash, accounts receivable, and accounts payable that had opening balances of $74,000, $61,000, and $40,000, respectively. T ACCOUNTS CASH ACCOUNT RECIVABLE BEGIN BAL: INVENTORY ACCOUNT PAYBLE SALE REVENUE COGS SALAIRE EXPENSE
6
Silk Enterprises operates a small retail store that makes all merchandise inventory purchases on account. During the current year, Silk's cost of goods sold is $193,000 and its cash payments to suppliers of inventory are $179,000. Which combination of changes to the inventory and accounts payable balances during the year are consistent with the difference between cost of goods sold and cash payments to suppliers of inventory? O Inventory increased by $28,000 and accounts payable increased by $42,000 O Inventory decreased by $28,000 and accounts payable decreased by $42,000 Inventory increased by $28,000 and accounts payable decreased by $42,000 Inventory decreased by $28,000 and accounts payable increased by $42,000 None of the above
Longmire & Sons made sales on credit to Alderman Sports totaling $500,000 on April 18. The cost of the goods sold is $400,000. Longmire estimates 3% of its sales to Alderman may be returned. On May 22, $9,000 worth of goods (with a cost of $7,200) are returned by Alderman. Longmire uses a periodic inventory system.
Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $119,000. The following information for the month of August was available from company records: Purchases Freight-in Sales Sales returns Purchases returns $ 212,000 4,500 343,000 8,300 3,600 In addition, the controller is aware of $12,000 of inventory that was stolen during August from one of the company's warehouses. 1. Estimated ending inventory 2. Estimated ending inventory Required: 1. Calculate the estimated inventory at the end of August, assuming a gross profit ratio of 25%. 2. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.
Concord Corporation's retail store and warehouse closed for an entire weekend while the year-end inventory was counted. When the count was finished, the controller gathered all the count books and information from the clerical staff, completed the ending inventory calculations, and prepared the following partial income statement for the general manager for Monday morning: Sales Beginning inventory Purchases Total goods available for sale Less: Ending inventory Cost of goods sold Gross profit 642,000 untany 1,550,000 4 2,192,000 642,000 $ 2,741,000 The general manager called the controller into her office after quickly reviewing the preliminary statements. "You've made an error in the inventory," she stated. "My pricing all year has been carefully controlled to provide a gross profit of 35%, and I know the sales are correct." (a) How much should the ending inventory have been? 1,550,000 $1,191,000

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