Question
The following information is available for Cosmic Corporation for the year ended December 31, 2019: Cost Retail Beginning inventory$5,500$20,000 Purchases82,500125,000 Purchases returns3,000 4,200 Freight-in5,000 Additional
The following information is available for Cosmic Corporation for the year ended December 31, 2019:
CostRetail
Beginning inventory$5,500$20,000
Purchases82,500125,000
Purchases returns3,000 4,200
Freight-in5,000
Additional markups16,742
Additional markup cancellations 5,000
Markdowns 3,542
Markdown cancellations 1,000
Sales125,000
Sales returns 5,000
(a)Calculate the estimated ending inventory at cost, using the retail method - average cost basis without LCNRV. (round your cost ratio to a maximum of 3 decimal places)
(b)Calculate the estimated ending inventory at cost, using the retail method - FIFO basis, with LCNRV. (round your cost ratio to a maximum of 3 decimal places)
(c)Assuming that the gross margin has averaged 35% of net sales over the past 3 years, calculate the estimated ending inventory at cost, using the gross margin method.
(Please remember to not use the "retail values" for anything other than "Sales" and "Sales Returns" when applying the gross margin method!)
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