Problem 5-23A (Static) Estimating ending inventory: gross margin method LO 5-4 Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following historical data were taken from the Year 1 and Year 2 accounting records. Year 1 Net sales Cost of goods sold $ 150,000 76,000 At the end of the first quarter of Year 3, Toyland's ledger had the following account balances. Year 2 $ 190,000 89,200 Sales Purchases Beginning inventory 1/1/Year 3 Ending inventory 3/31/Year 3 Based on purchases and sales, the Toyland accountant thinks inventory is low. $ 210,000 90,000 32,100 16,000 Required Using the information provided, estimate the following for the first quarter of Year 3: a. Cost of goods sold. (Use the average cost of goods sold percentage.) (Round your intermediate percentage values to 1 decimal place and final answer to nearest whole dollar amount.) a. Cost of goods sold b. Estimated ending inventory C. Estimated inventory shortage b. Ending inventory at March 31 based on the historical cost of goods sold percentage. c. Inventory shortage
Problem 5-23A (Static) Estimating ending inventory: gross margin method LO 5-4 Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following historical data were taken from the Year 1 and Year 2 accounting records. Year 1 Net sales Cost of goods sold $ 150,000 76,000 At the end of the first quarter of Year 3, Toyland's ledger had the following account balances. Year 2 $ 190,000 89,200 Sales Purchases Beginning inventory 1/1/Year 3 Ending inventory 3/31/Year 3 Based on purchases and sales, the Toyland accountant thinks inventory is low. $ 210,000 90,000 32,100 16,000 Required Using the information provided, estimate the following for the first quarter of Year 3: a. Cost of goods sold. (Use the average cost of goods sold percentage.) (Round your intermediate percentage values to 1 decimal place and final answer to nearest whole dollar amount.) a. Cost of goods sold b. Estimated ending inventory C. Estimated inventory shortage b. Ending inventory at March 31 based on the historical cost of goods sold percentage. c. Inventory shortage
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Problem 5-23A (Static) Estimating ending inventory: gross margin method LO 5-4
Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following
historical data were taken from the Year 1 and Year 2 accounting records.
Year 1
Net sales
Year 2
$ 190,000
89,200
$ 150,000
76,000
Cost of goods sold
At the end of the first quarter of Year 3, Toyland's ledger had the following account balances.
Sales
Purchases
Beginning inventory 1/1/Year 3
32,100
Ending inventory 3/31/Year 3
16,000
Based on purchases and sales, the Toyland accountant thinks inventory is low.
Required
Using the information provided, estimate the following for the first quarter of Year 3:
a. Cost of goods sold. (Use the average cost of goods sold percentage.) (Round your intermediate percentage values to 1 decimal
place and final answer to nearest whole dollar amount.)
b. Ending inventory at March 31 based on the historical cost of goods sold percentage.
c. Inventory shortage
a.
Cost of goods sold
b. Estimated ending inventory
C.
Estimated inventory shortage
$ 210,000
90,000
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