Question

Check my work Required information The following information applies to the questions displayed below.] Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2021 are as follows: Cost $ 93,000 362,000 9,300 7,300 Retail $183,000 583,000 Beginning inventory Purchases Freight-in Purchase returns Net markups Net markdowns Normal spoilage Abnormal spoilage Sales Sales returns 11,300 16,300 12,300 3,300 8,300 543,000 10,300 4,884 The company records sales net of employee discounts. Employee discounts for 2021 totaled $4,300. Required: 1. Estimate Sparrow's ending inventory and cost of goods sold for the year using the retail inventory method and the average cost application. (Round Cost-to-retail percentage to 2 decimal places and final answers to the nearest whole dollar amount.) Average cost application Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Answer 1

1.

Estimated Ending Inventory at retail	$          210,100.00
Estimated Ending Inventory at Cost	$          126,585.25
Estimated cost of goods sold	$          325,530.75

Working:

Particulars	Cost ($)	Retail ($)
Beginning Inventory	93000	183000
Add : Purchase	362000	583000
Less : Purchase Returns	-7300	-11300
Add : Freight in	9300
Net Markup		16300
Less : Net Markdowns		-12300
Abnormal Spoilage	-4884	-8300
Goods Available for sale (A)	452116	750400
Less : Normal Spoilage		-3300
Less : Sales
Net Sales (533000-9300)		-532700
Employee Discounts		-4300
Estimated Ending Inventory at Retail (B)		210100
Less : Estimated Ending Inventory at Cost (See Below) (B)	-126585.25
Estimated Cost of goods sold (A-B)	325530.75	540300

Cost to Retail % :-

= (Goods Available for sale at cost / Goods Available for sale at retail)*100

=(452116/750400)*100

60.25%

Amount of Estimated Ending Inventory at Cost :-

= Estimated Ending Inventory at retail * cost to retail %

=210100*60.25%

$126,585.25