Question

The records of Diskount Depart-ment Stores Inc. provided the following data for 20X5:
Sales ( gross)........... $ 800,000
Sales returns........... 2,000
Additional markups......... 9,000
Additional markup cancellations ... 5,000
Markdowns ........... 7,000
Purchases: At retail......... 850,000
At cost .............. 459,500
Purchase returns: At retail...... 4,000
At cost ............. 2,200
Freight on purchases ......... 7,000
Beginning inventory: At retail ..... 80,000
At cost ............... 45,000
Markdown cancellations ....... 3,000
1. Estimate the valuation of the ending inventory and cost of goods sold using the gross margin method. Last year’s gross margin percentage was 51%.
2. Estimate the valuation of the ending inventory and cost of goods sold using the retail sales method, which approximates lower- of- cost- or- NRV valuation.
3. Which method s likely to be more accurate? Comment.



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  • CreatedFebruary 17, 2015
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