Question
Retail Method; Gross Profit Method Selected data on merchandise inventory, purchases, and sales for Celebrity Tan and Ranchworks Co. are as follows: Cost Retail Celebrity
Retail Method; Gross Profit Method
Selected data on merchandise inventory, purchases, and sales for Celebrity Tan and Ranchworks Co. are as follows:
Cost | Retail | ||
Celebrity Tan | |||
Merchandise inventory, August 1 | $392,000 | $552,000 | |
Transactions during August: | |||
Purchases (net) | 4,507,000 | 6,348,000 | |
Sales | 6,530,000 | ||
Ranchworks Co. | |||
Merchandise inventory, March 1 | $239,000 | ||
Transactions during March through November: | |||
Purchases (net) | 3,176,000 | ||
Sales | 5,039,000 | ||
Estimated gross profit rate | 36% |
Required:
1. Determine the estimated cost of the merchandise inventory of Celebrity Tan on August 28 by the retail method, presenting details of the computations.
Celebrity Tan | |||
Cost of the Merchandise Inventory | |||
August 31 | |||
Cost | Retail | ||
$ | $ | ||
$ | $ | ||
Ratio of cost to retail price: | % | ||
$ | |||
$ | |||
2a. Estimate the cost of the merchandise inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations.
Ranchworks Co. | ||
Cost of the Merchandise Inventory | ||
November 30 | ||
Cost | ||
$ | ||
$ | ||
$ | ||
$ | ||
2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $178,600 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March thru November? $
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