[The following information applies to the questions displayed below.]Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2021 are as follows: CostRetailBeginning inventory$84,000 $174,000 Purchases 370,000 574,000 Freight-in 8,400 Purchase returns 6,400 10,400 Net markups 15,400 Net markdowns 11,400 Normal spoilage 2,400 Abnormal spoilage 4,467 7,400 Sales 534,000 Sales returns 9,400 The company records sales net of employee discounts. Employee discounts for 2021 totaled $3,400. Required:1. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. (Round Cost-to-retail percentage to 2 decimal places and final answers to the nearest whole dollar amount.)Estimated ending inventory at retailEstimated ending inventory at costEstimated cost of good sold

In the given question, Data of 2021 inventory is mentioned. We have to find Sparrow’s ending…

Answered: Sparrow Company uses the retail…

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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[The following information applies to the questions displayed below.]

Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2021 are as follows:

	Cost	Retail
Beginning inventory	$	84,000	$	174,000
Purchases		370,000		574,000
Freight-in		8,400
Purchase returns		6,400		10,400
Net markups				15,400
Net markdowns				11,400
Normal spoilage				2,400
Abnormal spoilage		4,467		7,400
Sales				534,000
Sales returns				9,400

The company records sales net of employee discounts. Employee discounts for 2021 totaled $3,400.

Required:
1. Estimate Sparrow’s ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. (Round Cost-to-retail percentage to 2 decimal places and final answers to the nearest whole dollar amount.)

Estimated ending inventory at retail

Estimated ending inventory at cost

Estimated cost of good sold

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