Grand Department Store, Inc., uses the retail inventory method to estimate ending inventory for its monthly financial
Question:
Inventory, October 1, 2018:
At cost ....................................................... $ 20,000
At retail ...................................................... 30,000
Purchases (exclusive of freight and returns):
At cost ....................................................... 100,151
At retail ....................................................... 146,495
Freight-in ..................................................... 5,100
Purchase returns:
At cost ....................................................... 2,100
At retail ...................................................... 2,800
Additional markups ....................................... 2,500
Markup cancellations ...................................... 265
Markdowns (net) .......................................... 800
Normal spoilage and breakage ........................... 4,500
Sales .......................................................... 135,730
Required:
1. Using the conventional retail method, prepare a schedule computing estimated lower of cost or market (LCM) inventory for October 31, 2018.
2. A department store using the conventional retail inventory method estimates the cost of its ending inventory as $29,000. An accurate physical count reveals only $22,000 of inventory at lower of cost or market. List the factors that may have caused the difference between computed inventory and the physical count.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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