Suppose Holt Renfrew, the specialty retailer, had these records for ladies' evening gowns during 2014. Beginning inventory

Question:

Suppose Holt Renfrew, the specialty retailer, had these records for ladies' evening gowns during 2014.

Beginning inventory (30 @ $1,000) .................................................. $ 30,000

Purchase in February (25 @ $1,100) ................................................. 27,500

Purchase in June (60 @ $1,200)........................................................ 72,000

Purchase in December (25 @ $1,300) ............................................... 32,500

Goods available ................................................................................. $162,000

Assume sales of evening gowns totalled 130 units during 2014 and that Holt's uses the weighted-average-cost method under the periodic inventory system to account for inventory. The income tax rate is 30%.

Requirements

1. Compute Holt's cost of goods sold for evening gowns in 2014.

2. Compute what cost of goods sold would have been if Holt had purchased enough inventory in December-at $1,300 per evening gown-to keep year-end inventory at the same level it was at the beginning of the year, 30 units.

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Financial Accounting

ISBN: 978-0133472264

5th Canadian edition

Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin

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