Selected data on inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Cost Retail Celebrity Tan Co. Inventory, August 1 $ 300,000 $ 575,000 Transactions during August: Purchases (net) 2,021,900 3,170,000 Sales 3,250,000 Ranchworks Co. Inventory, March 1 $880,000 Transactions during March through November: Purchases (net) 9,500,000 Sales 15,800,000 Estimated gross profit rate 38% Required: 1. Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method.* Enter all ratios as percents, rounded to one decimal place. 2. a. Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross profit method.* b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $369,750 of inventory was on hand. What was the estimated loss of inventory due to theft or damage during March through November? * Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Amount Descriptions Estimated cost of goods sold Estimated gross profit Estimated inventory, November 30 Estimated loss due to theft or damage, August Estimated loss due to theft or damage, March 1–November 30 Inventory, August 1 Inventory, August 31, at retail Inventory, August 31, at estimated cost Inventory, March 1 Merchandise available for sale Physical inventory count, August 31 Physical inventory count, November 30 Purchases for March-November (net) Purchases in August (net) Sales for August Sales for March-November 1. Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter all ratios as percents, rounded to one decimal place.

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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Selected data on inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows:

	Cost	Retail
Celebrity Tan Co.
Inventory, August 1	$ 300,000	$ 575,000
Transactions during August:
Purchases (net)	2,021,900	3,170,000
Sales		3,250,000

Ranchworks Co.
Inventory, March 1	$880,000
Transactions during March through November:
Purchases (net)	9,500,000
Sales	15,800,000
Estimated gross profit rate	38%

Required:

Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method.* Enter all ratios as percents, rounded to one decimal place.

a.	Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross profit method.*
b.	Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $369,750 of inventory was on hand. What was the estimated loss of inventory due to theft or damage during March through November?
	* Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Amount Descriptions
Estimated cost of goods sold
Estimated gross profit
Estimated inventory, November 30
Estimated loss due to theft or damage, August
Estimated loss due to theft or damage, March 1–November 30
Inventory, August 1
Inventory, August 31, at retail
Inventory, August 31, at estimated cost
Inventory, March 1
Merchandise available for sale
Physical inventory count, August 31
Physical inventory count, November 30
Purchases for March-November (net)
Purchases in August (net)
Sales for August
Sales for March-November

1. Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter all ratios as percents, rounded to one decimal place.

Celebrity Tan Co.
Estimated Cost af Inventary
August 31
Cost
Retail
5 Ratio of cost to retail price:
2 a Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross proft metnod. Refer to the Nst of Amount Descriptions provided for the exact wording of the answer cnoices for text entries. Enter al ratios as percents, rounded to one decimal place
Ranchworks Co.
Estimated Cost of Inventory
Navember 30
Cost

20. Assume that Ranchworks Co. took a physical inventory on November 30 and alscovered that $300,750 of inventory was on hand.
What was the estmated lass of inventary due to theft or damage during March through Navember?

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