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Determine the estimated cost of the merchandise inventory

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Reference no: EM133063286

Question - 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

$418,000

$536,000

Transactions during August:

 

 

Purchases (net)

4,808,000

6,164,000

Sales

 

6,341,000

Ranchworks Co.

 

 

Merchandise inventory, March 1

$194,000

 

Transactions during March through November:

 

 

Purchases (net)

2,577,000

 

Sales

4,511,000

 

Estimated gross profit rate

42%

 

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.

2a. Estimate the cost of the merchandise inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations.

2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $145,300 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through November?

Reference no: EM133063286

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