ABC Inc. is a retail company that operates several stores. During the year ended December 31, 2022, ABC Inc. had the following transactions related to its merchandise inventory:

Beginning inventory on January 1, 2022 $150,000
Purchases during the year $800,000
Freight-in costs $20,000
Purchase returns $15,000
Sales during the year $1,000,000
Sales returns and allowances $25,000
Ending inventory on December 31, 2022 $185,000

ABC Inc. uses the perpetual inventory system and the weighted-average cost method for inventory costing.

Calculate the following for ABC Inc. for the year ended December 31, 2022:

a) Cost of goods sold
b) Gross profit
c) Inventory turnover ratio
d) Average days to sell inventory
e) Lower of cost or market (LCM) for the ending inventory

Answer rating: 100% (QA)

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