Problem 13-7
Beg. Inventory 1,500,000
Purchases 5,500,000
TGAS 7,000,000
Cost of Sales (9.7M x 60%) 5,820,000
Estimated Inventory/Loss 1,180,000
Accounts Receivable
Beg. 700,000 Collec 8,400,000
Cr Sales? 8,800,000
End 1,100,000
Cash sales 900,000
Credit sales 8,800,000
Sales 9,700,000
Problem 13-6
Beg. inventory 1,000,000
Purchases, net 7,500,000
TGAS 8,500,000
Cost of Sales (9M x 70%) 6,300,000
Estimated inventory 2,200,000
Physical Count 2,500,000 what if?
Inventory shortage ( 300,000)
Gross Profit 2022 is 5% higher than in 2021
GP in 2021: Sales 6,000,000
COS 4,500,000 (5.5M – 1M)
GP 1,500,000 25%
2022 = 30%
Problem 13-10
June: Sales 7,920,000 – 120% of cost
Cost of Sales 6,600,000
Gross Profit 1,320,000
Problem 13-11
Beg. Inventory 500,000
Purchases 1,700,000
TGAS 2,200,000
Cost of Sales (2.6M x 60%) 1,560,000
Estimated Inventory 640,000
Out on consignment goods (120,000) (200,000 x 60%)
Salvage inventory ( 20,000)
Inventory loss 500,000
Accounts Payable
1,600,000 400,000 beg.
1,700,000 purchases ???
500,000 ending
Accounts Receivable
Beg. 480,000 Collec 2,640,000
? Sales 2,600,000_________________
End 440,000
Trend analysis
2019 GP 34.4% 2019 20%
2020 GP 40% 2020 25%
2021 GP 45% 2021 30%
2022 35%???
Weighted average GP rate:
Total GP/Total Sales
3,200,000/8,000,000 = 40%
RETAIL INVENTORY METHOD
Three cost model in computing Cost Ratio
- Conventional or Conservative or LCM method
- Average
- FIFO
Model:
Cost Retail
Beg. inventory xxx,xxx xxx,xxx
Purchases xxx,xxx xxx,xxx
Purchase Discount (xx,xxx) -
Purchase Returns (xx,xxx) (xx,xxx)
Purchase Allow. (xx,xxx) -
Purch. Ret/Allow (xx,xxx) (xx,xxx)
Freight-in xxx,xxx
Departmental transfer in xxx,xxx xxx,xxx
Departmental transfer out (xx,xxx) (xx,xxx)
Mark-up xxx,xxx
Mark-up cancellation _____ (xx,xxx)
TGAS – conservative approach xxx,xxx xxx,xxx Cost/Retail = Cost %
Mark-down (xx,xxx)
Markdown cancellation _____ xxx,xxx
TGAS – Average approach xxx,xxx xxx,xxx Cost/Retail = Cost %
Sales xxx,xxx
Sales Return (xx,xxx)
Employee Discount xxx,xxx xxx,xxx
Normal shortage, shrinkage, etc. (xx,xxx)
Abnormal shortage, shrinkage, etc. (xx,xxx) (xx,xxx)
Estimated Inventory at Retail xxx,xxx
Estimated Inventory at cost – Conservative xxx,xxx Inv. at Retail x Cost % at LCM
Estimated Inventory at cost – Average xxx,xxx Inv. at retail x Cost % at Average
FIFO:
Purchases xxx,xxx xxx,xxx
Purchase Discount (xx,xxx) -
Purchase Returns (xx,xxx) (xx,xxx)
Purchase Allow. (xx,xxx)
Purch. Ret/Allow (xx,xxx) (xx,xxx)
Freight-in xxx,xxx
Departmental transfer in xxx,xxx xxx,xxx
Departmental transfer out (xx,xxx) (xx,xxx)
Mark-up xxx,xxx
Mark-up cancellation (xx,xxx)
Mark-down (xx,xxx)
Markdown cancellation _____ xxx,xxx
TGAS – FIFO xxx,xxx xxx,xxx Cost/Retail = Cost %
Inventory – beg xxx,xxx
Sales xxx,xxx
Sales Return (xx,xxx)
Employee Discount xxx,xxx xxx,xxx
Normal shortage, shrinkage, etc. (xx,xxx)
Abnormal shortage, shrinkage, etc. (xx,xxx) (xx,xxx)
Estimated Inventory at Retail xxx,xxx
Estimated Inventory at Cost – FIFO xxx,xxx Inv. at retail X Cost % at FIFO
Problem 14-1
Cost Retail
Beg. inventory 500,000 770,000
Purchases 3,070,000 4,300,000
Transportation-in 70,000
Purch. Discount ( 45,000)
Purch. Returns ( 25,000) ( 40,000)
Markup 100,000
Markup cancellation ________ ( 30,000)
TGAS – LCM 3,570,000 5,100,000 = 70%
Markdown ( 350,000)
Markdown cancellation ______ 10,000
TGAS – Average 3,570,000 4,760,000 = 75%
Sales 4,000,000
Sales Ret. ( 80,000) 3,920,000
Est. Inventory at retail 840,000
Est. Inventory at Cost – LCM (840K x 70%) 588,000
Est. Inventory at Cost – Ave. (840K x 75%) 630,000
FIFO:
Cost Retail
Purchases 3,070,000 4,300,000
Transportation-in 70,000
Purch. Discount ( 45,000)
Purch. Returns ( 25,000) ( 40,000)
Markup 100,000
Markup cancellation ( 30,000)
Markdown ( 350,000)
Markdown cancellation ______ 10,000
TGAS – FIFO 3,070,000 3,990,000 = 77%
Beg. Inventory 770,000
Sales 4,000,000
Sales Ret. ( 80,000) 3,920,000
Est. Inventory at retail 840,000
Est. Inventory at Cost – FIFO (840K x 77%) 646,800
