Selected data on merchandise inventory, purchases, and sales for Bozeman Co. and Gallatin Co. are as follows:

Instructions
1. Determine the estimated cost of the merchandise inventory of Bozeman Co. on February 28 by the retail method, presenting details of the computations.
2. a. Estimate the cost of the merchandise inventory of Gallatin Co. on April 30 by the gross profit method, presenting details of the computations.
b. Assume that Gallatin Co. took a physical inventory on April 30 and discovered that $88,125 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March andApril?

Transcribed Image Text:

Cost Retail Bozeman Co. Merchandise inventory, February 1 Transactions during February: 210,000 300,000 Purchases (net) Sales Sales returns and allowances 1,135,500 1,650,000 1,800,000 40,000 Gallatin Co. Merchandise inventory, March 1 Transactions during March and April: 250,000 Purchases (net) Sales Sales returns and allowances 1,385,000 2,510,000 110,000 36% Estimated gross profit rate