Problem 1A subsidiary of J & J Products is in the process of preparinginterim...Problem...

Free

80.2K

Verified Solution

Question

Accounting

Problem 1
A subsidiary of J & J Products is in the process of preparinginterim financial statements. Since they take physical inventory onan annual basis they use the Conventional Retail Inventory Methodto estimate inventory. Fortunately, J & J Products keeps verydetailed inventory records at both cost and retail. The followinginformation for containers, as of the end of the third quarter,2015, is provided.
COST RETAIL
BEGINNING INVENTORY 90,000 167,000
PURCHASES 250,000 435,000
PURCHASE RETURNS 8,000
MARKUPS 10,000
MARKUPS CANCELLATIONS 25,000
MARKDOWNS 5,000
EMPLOYEE DISCOUNTS 9,000
SALES 400,000

Using the conventional retail inventory method calculate endinginventory at cost (for the third quarter of 2015).
Please show all calculations in detail. thanks!!!

Answer & Explanation Solved by verified expert

4.4 Ratings (715 Votes)

calculation of ending inventory at cost
particulars	Cost	retail
Beginning inventory	$ 90,000.00	$ 1,67,000.00
purchases	$ 2,50,000.00	$ 4,35,000.00
purchase return	$ 8,000.00
total	$ 3,32,000.00	$ 6,02,000.00
markups		$ 10,000.00
markup cancellation		$ 25,000.00
net markups (10000-25000)		$ -15,000.00
markdown		$ 5,000.00
employeess discount		$ 9,000.00
sales		$ 4,00,000.00
inventoey in retail( total-markdwon-enployees discount-sales)		$ 1,73,000.00
cost to retail ratio = 332000/602000= 0.55
closing inventory at cost = 0.55*173000= 95150

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingProblem 1A subsidiary of J & J Products is in the process of preparinginterim...Problem 1A subsidiary of J & J Products is in the process of preparinginterim financial statements. Since they take physical inventory onan annual basis they use the Conventional Retail Inventory Methodto estimate inventory. Fortunately, J & J Products keeps verydetailed inventory records at both cost and retail. The followinginformation for containers, as of the end of the third quarter,2015, is provided.COSTRETAILBEGINNING INVENTORY90,000167,000PURCHASES250,000435,000PURCHASE RETURNS8,000MARKUPS10,000MARKUPS CANCELLATIONS25,000MARKDOWNS5,000EMPLOYEE DISCOUNTS9,000SALES400,000Using the conventional retail inventory method calculate endinginventory at cost (for the third quarter of 2015).Please show all calculations in detail. thanks!!!