Retail Method; Gross Profit Method

Selected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows:

	Cost		Retail
Celebrity Tan Co.
Merchandise inventory, August 1	$253,000		$352,000
Transactions during August:
Purchases (net)	2,915,000		4,048,000
Sales			4,164,000
Ranchworks Co.
Merchandise inventory, March 1	$210,000
Transactions during March through November:
Purchases (net)	2,784,000
Sales	4,635,000
Estimated gross profit rate	39%

Required:

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

Celebrity Tan Co. Cost of the Merchandise Inventory August 31

		Cost	Retail
Merchandise available for saleMerchandise inventory, at estimated costMerchandise inventory, August 1Merchandise inventory, August 31, at retail priceSalesMerchandise inventory, August 1		$Merchandise inventory, August 1	$Merchandise inventory, August 1
Merchandise available for saleMerchandise inventory, at estimated costMerchandise inventory, August 31, at retailNet purchasesSalesNet purchases		Net purchases	Net purchases
Merchandise available for saleMerchandise inventory, at estimated costMerchandise inventory, August 1Merchandise inventory, August 31, at retailSalesMerchandise available for sale		$Merchandise available for sale	$Merchandise available for sale
Ratio of cost to retail price:	fill in the blank f28e2001dfbb05a_10%
Merchandise available for saleMerchandise inventory, at estimated costMerchandise inventory, August 1Merchandise inventory, August 31, at retail priceSalesSales			Sales
Merchandise available for saleMerchandise inventory, August 1Merchandise inventory, August 31, at retailNet purchasesSales			$- Select -
Merchandise available for saleMerchandise inventory, at estimated costMerchandise inventory, August 1Net purchasesSales			$- Select -

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
Estimated cost of merchandise soldEstimated merchandise inventory, November 30Merchandise available for saleMerchandise inventory, March 1Sales		$- Select -
Estimated cost of merchandise soldEstimated gross profitEstimated merchandise inventory, November 30Net purchasesSales		- Select -
Estimated cost of merchandise soldEstimated gross profitMerchandise available for saleMerchandise inventory, March 1Sales		$- Select -
Estimated cost of merchandise soldMerchandise available for saleMerchandise inventory, March 1Net purchasesSales	$- Select -
Less estimated gross profitLess estimated merchandise inventory, November 30Less merchandise available for saleLess merchandise inventory, March 1Less sales	- Select -
Estimated cost of merchandise soldMerchandise available for saleMerchandise inventory, March 1Net purchasesSales		- Select -
Estimated gross profitEstimated merchandise inventory, November 30Merchandise available for saleMerchandise inventory, March 1Sales		$- Select -

2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $156,700 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through Nove