Retail method; gross profit method 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%

Instructions 1. Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations.

2.

a. Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations.

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?

AppendixLO1