Inventory Estimation 1
Inventory Estimation 1
Purchases xx
Add: Freight in xx
Total xx
Less: Purchase returns, allowances, and discount (xx) xx
TOTAL GOODS AVAILABLE FOR SALE xx
Less: ENDING INVENTORY (xx)
COST OF SALES xx
Illustration
COST OF SALES
Net Sales x Cost ratio
700,000.00 x 60% 420,000.00
Illustration
140%
(100%)
40%
Try to solve
COST OF SALES
Net Sales x Cost ratio
3,000,000.00 x 75% 2,250,000.00
COST OF SALES
Net Sales / Sales ratio
3,000,000.00 / 125% 2,400,000.00
Retail Inventory Method
Solution
COST RETAIL
Inventory, Jan 1 179,600.00 200,000.00
Purchases 475,400.00 800,000.00
Less: Purchase Returns 50,000.00 80,000.00
Less: Purchase Discount 23,000.00
Less: Purchase Allowance 10,000.00
Add: Freight In 5,000.00
Add: Markups 200,000.00
Less: Markup cancellation 40,000.00
Add: Deparmental Transfer In 70,000.00 100,000.00
Less: Departmental Transfer out 60,000.00 90,000.00
Less: Abnormal Loss 20,000.00 40,000.00
Goods Available for Sale -Conservative 567,000.00 1,050,000.00
Less: Markdown 115,000.00
Add: Markdown canecellations 10,000.00
Goods Available for Sale - Average 567,000.00 945,000.00
Less: Net Sales including Normal Shrinkage 820,000.00
Ending Inventory at retail 125,000.00
567, 000
Average = 945,000 60% 75,000.00
567, 000
Conservative = 1,050,000 54% 67,500.00
0.54
0.60
GAS 567,000.00
less: EI 65,000.00
COS 502,000.00
GAS 567,000.00
less: EI 75,000.00
COS 492,000.00
GAS 567,000.00
less: EI 67,500.00
COS 499,500.00