The Quartz Company has been taking a physical inventory every quarter in order to prepare its quarterly financial statement. The management is interested to know if they have some alternative to find an efficient way of determining the cost of ending inventory for its quarterly reports. You have been given the following information abased on which you are supposed to suggest the management something that will fulfil the requirements. The Quartz Company Partial Income Statement For the year ended Dec 31, 2020 Net Sales $655,000 CGS: Beginning Inventory 80000 Purchases, Net 575000 COGAS 655000 Ending Inventory 223000 432000 Gross Margin on Sales $223000 The company has also provided you with the following additional information, a) In early 2021, it was determined that a sale of $5000 was recorded in late 2020 was actually an item provided to a good customer on consignment. The cost of the item was $3000 and was not included in the ending inventory. This particular item as returned in early 2021. b) Gross margin percentage for the previous years were 32%, 35%, 33% and 36%. c) Data for the first quarter of 2021 were sales $280000, net purchases $130000. Required: Explain to the management, how the ending inventory for the first quarter of 2021 can be estimated. Estimate the ending inventory at the end of the first quarter of 2021.
The Quartz Company has been taking a physical inventory every quarter in order to prepare its quarterly financial statement. The management is interested to know if they have some alternative to find an efficient way of determining the cost of ending inventory for its quarterly reports. You have been given the following information abased on which you are supposed to suggest the management something that will fulfil the requirements.
The Quartz Company
Partial Income Statement
For the year ended Dec 31, 2020
Net Sales $655,000
CGS:
Beginning
Inventory 80000
Purchases, Net 575000
COGAS 655000
Ending Inventory 223000 432000
Gross Margin on
Sales $223000
The company has also provided you with the following additional information,
- a) In early 2021, it was determined that a sale of $5000 was recorded in late 2020 was actually an item provided to a good customer on consignment. The cost of the item was $3000 and was not included in the ending inventory. This particular item as returned in early 2021.
- b) Gross margin percentage for the previous years were 32%, 35%, 33% and 36%.
- c) Data for the first quarter of 2021 were sales $280000, net purchases $130000.
Required:
- Explain to the management, how the ending inventory for the first quarter of 2021 can be estimated.
- Estimate the ending inventory at the end of the first quarter of 2021.
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