Phillips Supply uses a periodic inventory system but needs to determine the approximate amount of inventory at the end of each month without taking a physical inventory. Phillips has provided the following inventory data:

a. Estimate the cost of goods sold and the cost of the July 31 ending inventory using the retail method of evaluation.

b. Was the cost of Phillips’s inventory, as a percentage of retail selling prices, higher or lower in July than it was in June? Explain.

Transcribed Image Text:

Retail Selling Price Cost Price Inventory of merchandise, June 30. Purchases during July Goods available for sale during July. Net sales during July $300,000 $500,000 400,000 222,000 $522,000 $900,000 $600,000