Phillips Supply uses a periodic inventory system but needs to determine the approximate amount of inventory at the end of each month without a physical inventory. Phillips has provided the following inventory data.

Cost price Retail Selling Price

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Inventory of merchandise, June 30 300,000 500.000

Purchases during July 222,000 400,000

Goods available for sale during July 522,000 900,000

Net sales during July 600,000

1. Estimate the cost of goods sold and the cost of the July 31 ending inventory using the retail method of evaluation.
2. Was the cost of Phillips inventory, as a percentage of retail selling prices, higher or lower in July than it was in June? Explain.

Exercise 8.10
Part A
Cost ratio during July
Estimated cost of goods sold
Estimated ending inventory (at cost):
	Cost of goods available for sale during July
	Less: Estimated cost of goods sold
	Estimated ending inventory
Part B