0% found this document useful (0 votes)
10 views6 pages

Inventory Estimation 1

Uploaded by

Kriza Cabillo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
10 views6 pages

Inventory Estimation 1

Uploaded by

Kriza Cabillo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 6

Beginning inventory xx

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

Beginning inventory 100,000.00


Net Purchases 500,000.00 Net Sales
Net Sales 700,000.00 Less: Cost of Sales
Gross Profit based on sales 40% ← Gross Profit

The ending inventory is computed as follows:

Beginning inventory 100,000.00


Net Purchases 500,000.00
TOTAL GOODS AVAILABLE FOR SALE 600,000.00
Less: ENDING INVENTORY 180,000.00 ← 600,000 - 420,000
COST OF SALES 420,000.00

COST OF SALES
Net Sales x Cost ratio
700,000.00 x 60% 420,000.00

Illustration

Beginning inventory 200,000.00


Net Purchases 1,000,000.00 Net Sales
Net Sales 1,260,000.00 Less: Cost of Sales
Gross Profit based on cost 40% ← Gross Profit

Beginning inventory 200,000.00


Net Purchases 1,000,000.00
TOTAL GOODS AVAILABLE FOR SALE 1,200,000.00
Less: ENDING INVENTORY 300,000.00 ← 1,200,000 - 900,000
COST OF SALES 900,000.00
COST OF SALES
Net Sales / Sales ratio
1,260,000.00 / 140% 900,000.00
100%
(60%)
40%

140%
(100%)
40%
Try to solve

Beginning inventory 600,000.00


Purchases 2,530,000.00
Purchase Return 15,000.00
Purchase Allowance 5,000.00 2,550,000.00
Purchase Discount 10,000.00
Freight In 50,000.00
Sales 3,100,000.00
Sales Return 100,000.00 3,000,000.00
Sales Allowance 50,000.00
Sales Discount 150,000.00

a. Gross profit rate is 25% on sales


b. Gross profit rate is 25% on cost

a Beginning inventory 600,000.00


Net Purchases 2,550,000.00
TOTAL GOODS AVAILABLE FOR SALE 3,150,000.00
Less: ENDING INVENTORY 900,000.00
COST OF SALES 2,250,000.00

COST OF SALES
Net Sales x Cost ratio
3,000,000.00 x 75% 2,250,000.00

b Beginning inventory 600,000.00


Net Purchases 2,550,000.00
TOTAL GOODS AVAILABLE FOR SALE 3,150,000.00
Less: ENDING INVENTORY 750,000.00
COST OF SALES 2,400,000.00

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 -179,600


FIFO = 945,000- 200,000 52% 65,000.00

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

You might also like