Required Information Problem 9-13 (Algo) Retail inventory method; various applications [LO9-3, 9-4, 9-5] [The following information applies to the questions displayed below.] On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows: Beginning inventory Purchases Purchase returns Freight-in Net markups Net markdowns Net sales to customers Sales to employees (net of 25% discount) Normal spoilage Price Index: January 1, 2021 December 31, 2021 December 31, 2022 Problem 9-13 (Algo) Part 2 Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 2021 Average Cost Retail Method Cost Retail $ 96,000 $160,000 520,000 803,000 2,700 3,000 4,000 1.00 1.25 1.25 6,000 4,000 670,000 12,000 3,000 2022 Cost Retail $600,000 $950,000 2,400 5,750 8,000 8,200 6,200 Required: 2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method. (Round your cost-to-retall percentage to 2 decimal places and round your final answers to nearest whole dollar.) 680,000 12,000 4,000
Required Information Problem 9-13 (Algo) Retail inventory method; various applications [LO9-3, 9-4, 9-5] [The following information applies to the questions displayed below.] On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows: Beginning inventory Purchases Purchase returns Freight-in Net markups Net markdowns Net sales to customers Sales to employees (net of 25% discount) Normal spoilage Price Index: January 1, 2021 December 31, 2021 December 31, 2022 Problem 9-13 (Algo) Part 2 Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 2021 Average Cost Retail Method Cost Retail $ 96,000 $160,000 520,000 803,000 2,700 3,000 4,000 1.00 1.25 1.25 6,000 4,000 670,000 12,000 3,000 2022 Cost Retail $600,000 $950,000 2,400 5,750 8,000 8,200 6,200 Required: 2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method. (Round your cost-to-retall percentage to 2 decimal places and round your final answers to nearest whole dollar.) 680,000 12,000 4,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Required Information
Problem 9-13 (Algo) Retail inventory method; various applications [LO9-3, 9-4, 9-5]
[The following information applies to the questions displayed below.]
On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail,
and cost indexes for 2021 and 2022 are as follows:
Beginning inventory
Purchases
Purchase returns
Freight-in
Net markups
Net markdowns
Net sales to customers
Sales to employees (net of 25% discount)
Normal spoilage
Price Index:
January 1, 2021
December 31, 2021
December 31, 2022
Problem 9-13 (Algo) Part 2
Estimated ending inventory at retail
Estimated ending inventory at cost
Estimated cost of goods sold
2021
Average Cost
Retail Method
Cost Retail
$ 96,000 $160,000
520,000 883,000
2,700
4,000
3,000
1.00
1.25
1.25
6,000
4,000
670,000
12,000
3,000
2022
Cost
Retail
$600,000 $950,000
2,400
5,750
8,000
Required:
2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method. (Round your cost-to-retall
percentage to 2 decimal places and round your final answers to nearest whole dollar.)
8,200
6,200
680,000
12,000
4,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1de229ca-d610-4e0a-8ba8-f4b8dab4ff7a%2F209863de-9632-4103-a50f-4740ffc4db75%2F7ic1kt6_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
Problem 9-13 (Algo) Retail inventory method; various applications [LO9-3, 9-4, 9-5]
[The following information applies to the questions displayed below.]
On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail,
and cost indexes for 2021 and 2022 are as follows:
Beginning inventory
Purchases
Purchase returns
Freight-in
Net markups
Net markdowns
Net sales to customers
Sales to employees (net of 25% discount)
Normal spoilage
Price Index:
January 1, 2021
December 31, 2021
December 31, 2022
Problem 9-13 (Algo) Part 2
Estimated ending inventory at retail
Estimated ending inventory at cost
Estimated cost of goods sold
2021
Average Cost
Retail Method
Cost Retail
$ 96,000 $160,000
520,000 883,000
2,700
4,000
3,000
1.00
1.25
1.25
6,000
4,000
670,000
12,000
3,000
2022
Cost
Retail
$600,000 $950,000
2,400
5,750
8,000
Required:
2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method. (Round your cost-to-retall
percentage to 2 decimal places and round your final answers to nearest whole dollar.)
8,200
6,200
680,000
12,000
4,000
Expert Solution

Step 1
Retailers who resell products calculate their ending inventory balances using the retail inventory technique. This approach is predicated on the correlation between the cost of goods and their sale price. The approach should occasionally be augmented with a physical inventory count because it is not totally accurate. For the year-end financial statements, which need a high degree of inventory record accuracy, the results are insufficient.
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