Required:1. What is the estimated fire loss if OOO Company applies the conservative retail approach?2. What is the estimated cost of goods sold if OOO Company applies the FIFO retail approach?3. What is the estimated ending inventory if OOO Company applies the average cost approach? PROBLEM 40: OO0 Company uses the retail inventory method. At the end of the current year,000 Company suffered a fire loss that destroyed most of its inventory. After the fire, onlygoods with a selling price of P125,000, a cost of P100,000 and a net realizable value of P75,000was salvaged. The following information is available prior to the fire:CostP 1,100,000 P 2,200,00015,800,000540,000600,000300,000400,000RetailBeginning inventoryPurchases26,300,000Freight inPurchase returns1,000,000Purchase allowancesDepartmental transfer inMarkupsCancelation of markdown800,000300,000100,000900,000800,00050,00024,700,000350,000Departmental transfer outMarkdownsCancelation of markupSalesSales returns350,000200,000100,000600,0005% of salesSales discountsSales allowancesEmployee discountsNormal wastage

Retail inventory method refers to the method used by retailers who resell products in order to…

Required: 1. What is the estimated fire loss if OOO Company applies the conservative retail approach? 2. What is the estimated cost of goods sold if OOO Company applies the FIFO retail approach? 3. What is the estimated ending inventory if OOO Company applies the average cost approach?

Required: 1. What is the estimated fire loss if OOO Company applies the conservative retail approach? 2. What is the estimated cost of goods sold if OOO Company applies the FIFO retail approach? 3. What is the estimated ending inventory if OOO Company applies the average cost approach?

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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Question

Required:

1. What is the estimated fire loss if OOO Company applies the conservative retail approach?

2. What is the estimated cost of goods sold if OOO Company applies the FIFO retail approach?

3. What is the estimated ending inventory if OOO Company applies the average cost approach?

PROBLEM 40: OO0 Company uses the retail inventory method. At the end of the current year,
000 Company suffered a fire loss that destroyed most of its inventory. After the fire, only
goods with a selling price of P125,000, a cost of P100,000 and a net realizable value of P75,000
was salvaged. The following information is available prior to the fire:
Cost
P 1,100,000 P 2,200,000
15,800,000
540,000
600,000
300,000
400,000
Retail
Beginning inventory
Purchases
26,300,000
Freight in
Purchase returns
1,000,000
Purchase allowances
Departmental transfer in
Markups
Cancelation of markdown
800,000
300,000
100,000
900,000
800,000
50,000
24,700,000
350,000
Departmental transfer out
Markdowns
Cancelation of markup
Sales
Sales returns
350,000
200,000
100,000
600,000
5% of sales
Sales discounts
Sales allowances
Employee discounts
Normal wastage

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