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r answer to question 7 on the following data obtained from the records Base your of the Quality Mens Shop as of December 31, 20x1 Inventory-December 31, 20x0 s 15,210 28,420 Cost Selling price Cost Seling price Purchases: 93,450 154,900 1,560 Returns Purchases Cost Selling price 2,220 3,320 173,500 Sales REQUIRED: Using the work sheet provided at the back of this unit, compute the December 31, 20x1, inventory at cost, using the retail inventory method. Then answer the following question 7-The ending inventory at cost is A. $10,833, B. $6,500 C. $3,900 D. $2,600 Base your answer to question 8 on the following account balances taken from the ledger of the Wizard Company as of December 31, 20X3 Sales Sales returns and allowances Purchases Transportation-irn Purchase returns and allowances $725,200 15,240 529,210 5,900 4,750 90,450 Merchandise inventory, December 31, 20x2 REQUIRED: The gross profit was 30% of net sales in all previous years. Prepare an estimate of the December 31, 20X3, inventory, using the work sheet provided at the back of this unit, and then answer question 8 8. The estimated December 31, 20X3, inventory, computed by using the gross-profit method of estimating inventories is A. $123,838 B. $117,938 C. $113,170 D. $111,210

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Answer #1

7. Cost of Ending Inventory as per Retail Inventory Method: Particulars a. Cost of goods Available for Sale, Opening Inventor

8. Extract for Calculation of Ending Inventorv as on Dec 20X3: Particulars a. Opening Inventory as on Dec 20X2 b. Purchases made during the year C. Less Purchase Returns d. Transportation In e. Gross Profit (30% of Net Sales) 30% * (725200-15240)] (30% * 709960) f. Total (a+b+c+d+e) g. Net Sales (725200-15240) h. Ending Inventory(f-o Amount 90450 529210 -4750 5900 212988 833798 709960 123838

ANSWER :

Question 7 : Option C $3900

Question 8 : Option A $123838

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