Question

San Lorenzo General Store uses a periodic inventory system and the goods sold. The following data are available for the month of October 2021: Cost $42,000 12,030 Beginning inventory Net purchases Net markups Net markdowns Net Sales Retail $57,000 32,300 1.900 1,150 39.000 Required: Complete the table below to estimate the average cost of ending inventory and cost of goods sold for October using the information provided Cost Retail Cost-to- Retail Ratio $ Beginning inventory Plus: Net purchases 42,000 12,030 57,000 32,300 1,900 1,150 90,050 Net markups Less Net markdowns Goods available for sale 54,030 60 % Cost to retail percentage 39,000 51,050 Less Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 25,200 28,830 X

Answer 1

Ending inventory at cost = Ending inventory at retail * 60% = $51,050 * 60% = $30,630

Estimated cost of goods sold = Beginning inventory + Purchases - Ending inventory

= $42,000 + $12,030 - $30,630

= $23,400