Question

The records of Alaska Company provide the following information for the year ended December 31. 0.71 points At Cost $ 472,150 At Retail $ 927,950 Beginning inventory, January 1 Cost of goods purchased Sales Sales returns 3,852,710 6,280,150 eBook 5,503,700 45,400 Print Required: 1. Use the retail inventory method to estimate the company's year-end inventory at cost. 2. A year-end physical inventory at retail prices yields a total inventory of $1,683,800. Prepare a calculation showing the company's loss from shrinkage at cost and at retail. References Complete this question by entering your answers in the tabs below.

Answer 1

1	Calculation of company's year- end inventory at cost
		At cost ($)	Cost to Retail	At Retail ($)
			Ratio
	Beginning Inventory	472,150.00		927,950.00
	Cost of goods purchased	3,852,710.00		6,280,150.00
	Cost of goods available for sale	4,324,860.00	60%	7,208,100.00
	Net Sales at retail			(5,458,300.00)
	Estimated ending inventory	1,049,880.00		1,749,800.00
	Explanation
	Cost to Retail Ratio = 4,324,860/7,208,100 = 60%
	Net Sales at retail = Sales - Sales return
	= 5,503,700-45,400 = $5,458,300
	Estimated ending inventory at cost = 1,749,800*60% = 1,049,880
2	ALASKA COMPANY
	Inventory Shortage
	December. 31
		At Cost ($)	At Retail ($)
	Estimated Inventory	1,049,880.00	1,749,800.00
	Physical Inventory	1,010,280.00	1,683,800.00
	Inventory Shortage	39,600.00	66,000.00
	Explanation
	Physical Inventory at cost = 1,683,800*60% = $1,010,280