Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 10, Problem 10.18E
a.
To determine
The historic gross profit percentage.
b.
To determine
The estimated cost of goods sold.
c.
To determine
The estimated gross profit.
d.
To determine
The estimated ending inventory.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Lily Company needs to determine the amount of inventory in its warehouse at the time that an earthquake destroyed
it. Lily's gross profit percentage averaged 27% over the last three years. Lily began the current year with inventory of
$840,000. Its net purchases were $4,387,000 and net sales were $3,970,000 during the year before the earthquake
occurred. Use the gross profit method to estimate the inventory on hand on the date of the earthquake.
Identify the appropriate formula and then calculate Lily's estimated ending inventory.
Estimated ending inventory
!!
Adams Corporation estimates that it lost $75,000 in inventory from a recent flood. The following information is available from the records of the company’s periodic inventory system: beginning inventory, $150,000; purchases and net sales from the beginning of the year through the date of the flood, $450,000 and $700,000, respectively. What is the company’s gross profit ratio?
Gross profit ratio
Choose Numerator:
Choose Denominator:
Gross profit ratio
/
=
Gross profit ratio
/
=
Adams Corporation estimates that it lost $187,200 in inventory from a recent flood. The following information is available from the records of the company's periodic inventory system: beginning inventory, $330,000; purchases and net sales from the beginning of the year through the date of the flood, $570,000 and $880,000, respectively. a. What is the company's gross profit ratio? b. What is the gross profit ratio?
Chapter 10 Solutions
Intermediate Accounting (2nd Edition)
Ch. 10 - How is inventory tracked under a perpetual...Ch. 10 - Barbara Wight is Chief Financial Officer at Taylor...Ch. 10 - What costs should be included in the unit cost of...Ch. 10 - When does the inventory allocation problem arise?Ch. 10 - Explain the difference between the FIFO method of...Ch. 10 - Which method of inventory results in an inventory...Ch. 10 - If unit costs are rising and inventory levels are...Ch. 10 - How can financial statements be converted from the...Ch. 10 - Explain the unit of measure under the dollar-value...Ch. 10 - What do firms use as the market value when...
Ch. 10 - Do U.S. GAAP and IFRS treat inventory write-downs...Ch. 10 - Under IFRS, how do firms determine...Ch. 10 - How does the conventional retail method...Ch. 10 - Why would a company use the gross profit method to...Ch. 10 - How are required LIFO disclosures used to compute...Ch. 10 - How does a company build LIFO layers under the...Ch. 10 - Giddens Company adopted the dollar-value UFO...Ch. 10 - The Loyd Company lad 150 units of product Omega on...Ch. 10 - Simmons, Inc. uses the lower-of-cost-or-market...Ch. 10 - Simmons, Inc. uses the lower-of-cost-or-market...Ch. 10 - The Loyd Company had 150 units of product Omega on...Ch. 10 - The Loyd Company had 150 units of product Omega on...Ch. 10 - On March 1, Year 1, LuxWear me had beginning...Ch. 10 - Types of Manufacturing Inventory. Complete the...Ch. 10 - Periodic Inventory System. Emmy Company uses a...Ch. 10 - Prob. 10.3BECh. 10 - Prob. 10.4BECh. 10 - FIFO, Perpetual Basis. Spider incorporated...Ch. 10 - LIFO, Perpetual Basis. Using the information...Ch. 10 - Prob. 10.7BECh. 10 - LIFO Reserve. Best Stores is considering a change...Ch. 10 - LIFO. Perpetual Basis. Source Enterprises reports...Ch. 10 - LIFO Liquidation. Using the information provided...Ch. 10 - Prob. 10.11BECh. 10 - Dollar-Value LIFO, Conversion to FIFO. Using the...Ch. 10 - Lower of Cost or Market. Count Clothing Company...Ch. 10 - Lower of Cost or Market. Using the information in...Ch. 10 - Lower of Cost or Market, IFRS. Using the...Ch. 10 - Prob. 10.16BECh. 10 - Prob. 10.17BECh. 10 - Lower of Cost or Market. Sarat Boot Company...Ch. 10 - Prob. 10.19BECh. 10 - Prob. 10.20BECh. 10 - Prob. 10.21BECh. 10 - Gross Profit Method. Sammi Company needs to...Ch. 10 - Prob. 10.23BECh. 10 - LIFO Retail Inventory Method. Complete the...Ch. 10 - LIFO Retail Inventory Method. Complete the...Ch. 10 - Moving Average, FIFO, LIFO. Arthur Lloyd...Ch. 10 - Moving Average, FIFO, LIFO, Presentation, and...Ch. 10 - Moving Average, FIFO, LIFO. Zoola, Inc. provided...Ch. 10 - Prob. 10.4ECh. 10 - LIFO, Conversion to FIFO. Inventory transactions...Ch. 10 - LIFO. Burke Company uses the LIFO perpetual method...Ch. 10 - Prob. 10.7ECh. 10 - Dollar-Value LIFO, LIFO Reserve. CWB Teleconcepts,...Ch. 10 - Dollar-Value LIFO, No Liquidation. Joe the Grocer...Ch. 10 - Prob. 10.10ECh. 10 - Lower of Cost or Market. All-Kinds-of-Cases...Ch. 10 - Prob. 10.12ECh. 10 - Lower of Cost or Market. Printmaster Distributors...Ch. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Conventional Retail Inventory Method. Melvin...Ch. 10 - Gross Profit Method. A tsunami destroyed Kyoto...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - Dollar-Value LIFO Retail Inventory Method....Ch. 10 - Moving Average, FIFO, LIFO. Morocco Imports...Ch. 10 - Prob. 10.2PCh. 10 - LIFO, Conversion to FIFO. The Outsider Company,...Ch. 10 - Dollar-Value LIFO. The Happenings Company adopted...Ch. 10 - Dollar-Value LIFO. No Liquidation. Nat's Toy...Ch. 10 - Dollar-Value LIFO, LIFO Liquidation. The following...Ch. 10 - Dollar-Value LIFO. LIFO Liquidation. Silvio's...Ch. 10 - Lower of Cost or Market. Framingdale Factories....Ch. 10 - Lower of Cost or Market. O'Sullivan Corporation...Ch. 10 - Conventional Retail Inventory Method. John Stevens...Ch. 10 - Prob. 10.11PCh. 10 - Prob. 10.12PCh. 10 - Basic Retail Inventory Method and Conventional...Ch. 10 - Basic Retail Inventory Method and Conventional...Ch. 10 - Prob. 10.15PCh. 10 - Conventional Retail Inventory Method, Lower of...Ch. 10 - Prob. 1JCCh. 10 - Judgment Case 2: Inventory Costing BBS is a...Ch. 10 - Judgment Case 3: Lower of Cost or Market KR...Ch. 10 - Prob. 1FSCCh. 10 - Prob. 2FSCCh. 10 - Prob. 1SSCCh. 10 - Prob. 2SSCCh. 10 - Surfing the Standards Case 3: Time Shares Treasure...Ch. 10 - Surfing the Standards Case 4: Lower of Cost or...Ch. 10 - Prob. 1BCCCh. 10 - Basis for Conclusions Case 2: The Lower of Cost or...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On 1st Nov 2020, a business had inventory of $380,000. During the month, sales totalled $650,000 and purchases $480,000. On 30th Nov 2020 a flood destroyed some of the inventory. The undamaged goods in inventory were valued at $220,000. The business operates with a standard gross profit margin of 25%.Based on this information, what is the cost of the inventory destroyed in the flood?arrow_forwardRequired: Ignoring income tax, what is the net income for the current year?arrow_forwardPlease Solve Correct solution with Explanation and Do not Give Image formatarrow_forward
- A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that date indicated the following: Merchandise inventory, January 1, 2021 $1,900,000Purchases to date 5,800,000Freight-in 400,000Sales to date 8,200,000 The gross profit ratio has averaged 20% of sales for the past four years.Required:Use the gross profit method to estimate the cost of the inventory destroyed in the fire.arrow_forwardThe financial records of Richard Co. were destroyed by fire at the end of 1999 fortunately the controller had keep certain statistical data related to the income statement as presidented below. 1-The beginning inventory was 92,000 and decreased 20% during the current year. 2- Sales discounts 16,400 3-Interest expenses was 19,500 4-The income tax rate is 30% 5-Cost of goods sold 450,000 6-Administrative expenses are 20% of cost of goods sold. 7-Gross profit was 30% of cost of goods sold. 8-Four-fifths of operating expenses relate to sales activities. Ins From the foreging information prepare income statement with ( Multiple- step form ) for the year ended in 31/12/1999.arrow_forwardEbbers Corporation overstated its ending inventory balance by $15,000 in the current year. What impact will this error have on cost of goods sold and gross profit in the current year and following year?arrow_forward
- Butterfly Company began October with inventory of $192,000. The business made net purchases of $635,000 and had net sales of $910,000 before a fire destroyed the company's inventory. For the past several years, Butterfly Company's gross margin on sales has been 38 percent. Required 1. Estimate the cost of the inventory destroyed by the fire 2. Identify another reason owners and managers use the gross margin method to estimate inventory on a regular basis Requirement 1. Estimate the cost of the inventory destroyed by the fire Cost of goods available for sale Estimated cost of goods sold Less Estimated cost of inventory destroyed Requirement 2. Identify another reason owners and managers use the gross margin method to estimato inventory on a regular basis. Another reason owners and managers use the gross margin method to estimate inventory cost on a regular basis is to determinearrow_forwardOffice Stop Supplies' $3.7 million cost of inventory at the end of last year was understated by $1.0 million. Read the requirements. 1. Was last year's reported gross profit of $2.4 million overstated, understated, or correct? What was the correct amount of gross profit last year? Last year's reported gross profit of $2.4 million was understated. year is $ 3.4 million. 2. Is this year's gross profit of $2.6 million overstated, understated, or correct? What is the correct amount of gross profit for the current year? This year's reported gross profit of $2.6 million is overstated. The correct amount of gross profit for this year is $ 1.6 million. 3. Was last year's reported cost of goods sold of $5.5 million overstated, understated, or correct? What was the correct amount of cost of goods sold last year? Last year's reported cost of goods sold of $5.5 million was The correct amount of gross profit for last year is million. Requirements The correct amount of cost of goods sold for last 1.…arrow_forwardCoastal Shores Inc. (CSI) was completely destroyed by Hurricane Fred on August 5, 2013. At January 1, CSI reported an inventory of $170,000. Sales from January 1, 2013, to August 5, 2013, totaled $480,000 and purchases totaled $195,000 during that time. CSI normally shows a gross profit percentage of 40%. The estimated inventory loss due to Hurricane Fred would be:arrow_forward
- Blossom Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation's books disclosed the following. Beginning inventory Purchases for the year Purchase returns $168,500 Amount of the loss 412,700 30,100 Sales revenue Sales returns Rate of gross profit on net sales $628,200 25,600 20 % Merchandise with a selling price of $20,300 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,200 had a net realizable value of $5,200. Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.arrow_forwardMarigold Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank. January 1 inventory was $324,000 and purchases for January through April totalled $797,000. Sales for the same period were $1.1 million. Marigold 's normal gross profit percentage is 30%.Using the gross profit method, estimate the amount of Marigold 's April 30 inventory that was destroyed. Estimated ending inventory destroyed in explosionarrow_forward22. Assume the following information regarding a note received by HEERHUM YU Company: Principal amount of note receivable Date of note P1,500,000 October 1, 2020 120 days December 1, 2020 Term of note Date of discounting Discount rate 12% Interest income for 120 days P50,000 how much is the discount charged by bank to HEERHUM YU Company?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License