Question

Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2018: Cost Retail

Cost Retail

Beginning inventory $ 22,400    $ 41,600

Net purchases $11,200 ?

Net markups $10,900

Net markdowns $2,900

Net sales ?

The company used the average cost flow method and estimated inventory at the end of September to be $17,377.50. If the company had used the LIFO cost flow method, the cost-to-retail percentage would have been 50%. Required:

Required:

Compute net purchases at retail and net sales for the month of September.

Net Purchases
Net Sales

Answer 1

Compute Goods available at retail as follows: Cost to retail (given) = 50% Net Purchase Goods available at retail= Cost toretail % $11,200 50% = $22.400 Compute Net purchase at retail as follows: Particulars Goods available at retail Less: Markup Add: Mark down Net Purchase at retail Amount $22.400 ($10.900) $2.900 $14.400

Compute Ending inventory at retail: Cost to retail = $33,600/$64,000 = 52.5% Estimated Inventory at retail== _Estimated Inventory Cost to retail% _$17,377.5 52.5% =$33,100 Compute Net Sales as follows: Cost $22.400 $11.200 Beginning Inventory Add: Purchase Add: Net Markup Less: Net markdown Retail $41,600 $14.400 $10.900 ($2.900) $64.000 $30,900 $33.100 $33.600 Net sales (bal. fig.) Ending Inventory (See working)