Question The management of Flames Technologies Ltd (FTL) provided the following information relating to its operations for the year ended December 31, 2020: $1,610,000 $50,000 Sales Sales returns It began the 2020 year with inventory at cost, $248,000 and valued at retail, $441,600 During the year the company made purchases at cost, $964,000 and valued at retail $1,363,800; freight charges were $30,500. Purchase returns at cost were $30,200 and valued at retail at $49,600 The management of FTL also provided information pertaining to markups and markdowns as shown below: The company had additional markups of $93,200 Markup cancellations during the year amounted to $10,800 Markdowns during the year amounted to $39,200 Markdown cancellations during the year amounted to $10,500 Normal shortages due to theft amounted to $58,200 On 31 December 2020, a major fire destroyed all the company's inventory in its warehouse, and in order to make an insurance claim, the management team of FTL has requested that you provide an estimate of the ending inventory that was destroyed. Required: Using the conventional retail method, determine the value of the ending inventory for 2020 as requested by FTL. (Show all your work and calculations clearly. Round your calculations to two decimal places)
Question The management of Flames Technologies Ltd (FTL) provided the following information relating to its operations for the year ended December 31, 2020: $1,610,000 $50,000 Sales Sales returns It began the 2020 year with inventory at cost, $248,000 and valued at retail, $441,600 During the year the company made purchases at cost, $964,000 and valued at retail $1,363,800; freight charges were $30,500. Purchase returns at cost were $30,200 and valued at retail at $49,600 The management of FTL also provided information pertaining to markups and markdowns as shown below: The company had additional markups of $93,200 Markup cancellations during the year amounted to $10,800 Markdowns during the year amounted to $39,200 Markdown cancellations during the year amounted to $10,500 Normal shortages due to theft amounted to $58,200 On 31 December 2020, a major fire destroyed all the company's inventory in its warehouse, and in order to make an insurance claim, the management team of FTL has requested that you provide an estimate of the ending inventory that was destroyed. Required: Using the conventional retail method, determine the value of the ending inventory for 2020 as requested by FTL. (Show all your work and calculations clearly. Round your calculations to two decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The management of Flames Technologies Ltd (FTL) provided the following information relating
to its operations for the year ended December 31, 2020:
Sales
$1,610,000
$50,000
Sales returns
It began the 2020 year with inventory at cost, $248,000 and valued at retail,
$441,600
During the year the company made purchases at cost, $964,000 and valued at
retail $1,363,800; freight charges were $30,500.
Purchase returns at cost were $30,200 and valued at retail at $49,600
The management of FTL also provided information pertaining to markups and markdowns as
shown below:
The company had additional markups of $93,200
Markup cancellations during the year amounted to $10,800
Markdowns during the year amounted to $39,200
Markdown cancellations during the year amounted to $10,500
Normal shortages due to theft amounted to $58,200
On 31 December 2020, a major fire destroyed all the company's inventory in its warehouse, and
in order to make an insurance claim, the management team of FTL has requested that you
provide an estimate of the ending inventory that was destroyed.
Required:
Using the conventional retail method, determine the value of the ending inventory for
2020 as requested by FTL.
(Show all your work and calculations clearly. Round your calculations to two
decimal places)
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