Question: Babyland wishes to produce quarterly financial statements but it takes

Babyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year end. The following historical data were taken from the 2013 and 2014 accounting records:

At the end of the first quarter of 2015, Babyland’s ledger had the following account balances:

Based on purchases and sales, the Babyland accountant thinks inventory is low.

Using the information provided, estimate the following for the first quarter of 2015:
a. Cost of goods sold. (Use the average cost of goods sold percentage.)
b. Ending inventory at March 31.
c. What could explain the difference between actual and estimatedinventory?
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  • CreatedOctober 26, 2013
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