Chapter 8 pt 2 Flashcards
Reyes Company had a gross profit of $620,000, total purchases of $840,000, and an ending inventory of $480,000 in its first year of operations as a retailer. Reyes’s sales in its first year were
$980,000
Davis Company uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $390,000 ($594,000), purchases during the current year at cost (retail) were $2,055,000 ($3,300,000), freight-in totaled $129,000, sales during the current year totaled $3,000,000, net markups were $72,000 and net markdowns were $108,000. What amounts should be excluded from the cost to retail complement?
$108,000
The following information is available for October for Barton Company:
Beginning inventory $350,000
Net purchases 1,050,000
Net sales 2,100,000
Percentage markup on cost 66.67%
A fire destroyed Barton’s October 31 inventory, leaving undamaged inventory with a cost of $21,000. Using the gross profit method, the estimated ending inventory destroyed by fire is
$119,000
On March 15, a fire destroyed Interlock Company’s entire retail inventory. The inventory on hand as of January 1 totaled $6,600,000. From January 1 through the time of the fire, the company made purchases of $2,732,000, incurred freight-in of $312,000, and had sales of $4,840,000. Assuming the rate of gross profit to selling price is 30%, what is the approximate value of the inventory that was destroyed?
$6,256,000
BI + P + freight in
cogs: sales*(1-gp %)
Dicer Company uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) was $390,000 ($594,000), purchases during the current year at cost (retail) were $2,055,000 ($3,300,000), freight-in totaled $129,000, sales during the current year totaled $3,000,000, and net markups (markdowns) were $72,000 ($108,000). What is Dicer’s ending inventory value at cost?
$556,842
Cost AFS: BI + P + Freight
Retail AFS: BI + P + Markups
End Inv at retail: AFS - markdowns - net sales
Ratio = cost afs / end inv at retail + net sales
end inv at cost: end inv at retail * ratio
Plank Co. uses the retail inventory method. The following information is available for the current year.
Beginning inventory Cost $312,000 Retail $488,000
Purchases Cost $1,180,000 Retail $1,660,000
Freight-in $20,000
Employee discounts $8,000
Net markups $60,000
Net markdowns $80,000
Sales revenue $1,560,000
The approximate cost of the ending inventory by the conventional retail method is
$383,600
GAFS COST: BI + P + FI
GAFS RETAIL: BI + P + MARKUPS
The sales price for a product provides a gross profit of 20% of sales price. What is the gross profit as a percentage of cost?
25%
When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because
tends to give a better approximation of the lower-of-cost-or-market
The following data concerning the conventional retail inventory method are taken from the financial records of Welch Company.
Beginning inventory Cost $196,000 Retail $280,000
Purchases Cost $896,000 Retail $1,280,000
Freight-in $24,000
Net markup $80,000
Net markdowns $56,000
Sales $1,344,000
The ending inventory at retail is estimated to be
$240,000
On January 1, 2025, the inventory of Glaus, Inc. was $1,600,000. In 2025, Glaus purchased $3,200,000 of merchandise and recorded sales of $4,000,000. The gross profit rate on these sales was 25%. What is the inventory of Glaus at December 31, 2025?
$1,800,000
