Retail method; gross profit method Selected data on inventory, purchases, and sales for Jaffe Co. and Coronado Co. are as follows:

Cost Retail Jaffe Co.

Inventory, February 1 $ 400,000 $ 615,000 Transactions during February:

Purchases (net) 4,055,000 5,325,000 Sales 5,100,000 Coronado Co.

Inventory, May 1 $ 400,000 Transactions during May thru October:

Purchases (net) 3,150,000 Sales 4,750,000 Estimated gross profit rate 35%

Instructions 1. Determine the estimated cost of the inventory of Jaffe Co. on February 28 by the retail method, presenting details of the computations.

2.

a. Estimate the cost of the inventory of Coronado Co. on October 31 by the gross profit method, presenting details of the computations.

b. Assume that Coronado Co. took a physical inventory on October 31 and discovered that

$366,500 of inventory was on hand. What was the estimated loss of inventory due to theft or damage during May through October?

AppendixLO1