Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following historical data were taken from the 2016 and 2017 accounting records:

At the end of the first quarter of 2018, Toyland€™s ledger had the following account balances:
Sales ...............$210,000
Purchases ............ 90,000
Beginning inventory 1/1/2018 .... 32,100
Ending inventory 3/31/2018 ...... 16,000
Based on purchases and sales, the Toyland accountant thinks inventory is low.
Required
Using the information provided, estimate the following for the first quarter of 2018:
a. Cost of goods sold.
b. Ending inventory at March 31.
c. What could explain the difference between actual and estimated inventory?

Transcribed Image Text:

2016 2017 Net sales Cost of goods sold $150,000 $190,000 89,200 76,000