Estimate the cost of the merchandise inventory

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Reference no: EM132694614

Problem - Selected data on inventory, purchases, and sales for Jaffe Co. and Coronado Co. are as follows:


Cost

Retail

Jaffe Co.



Inventory, February 1

$ 400,000

$ 615,000

Transactions during February:



Purchases (net)

4,055,000

5,325,000

Sales


5,100,000




Coronado Co.



Inventory, May 1

$ 400,000


Transactions during May thru October:



Purchases (net)

3,150,000


Sales

4,750,000


Estimated gross profit rate

35%


Instructions -

1. Determine the estimated cost of the merchandise inventory of Jaffe Co. on February 28 by the retail method, presenting details of the computations.

2. a. Estimate the cost of the merchandise inventory of Coronado Co. on October 31 by the gross profit method, presenting details of the computations.

2. b. Assume that Coronado Co. took a physical inventory on October 31 and discovered that $366,500 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during May through October?

Reference no: EM132694614

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