Ch. 6 & 7) Retail Method; Gross Profit Method Selected data on merchandise inventory, purchases, and sales for Celebrity Tan and Ranchworks Co. are as follows: Cost Retail Celebrity Tan Merchandise inventory, August 1 $254,000 $368,000 Transactions during August: Purchases (net) Sales 2,920,000 4,232,000 4,353,000 Ranchworks Co. Merchandise inventory, March 1 $191,000 Transactions during March through November: Purchases (net) 2,539,000 Sales 4,371,000 Estimated gross profit rate 41% Required: 1. Determine the estimated cost of the merchandise inventory of Celebrity Tan on August 28 by the retail method, presenting details of the computations. Celebrity Tan Cost of the Merchandise Inventory Merchandise inventory, August 1 Net purchases Merchandise available for sale Ratio of cost to retail price: Sales August 31 Merchandise inventory, August 31, at retail Merchandise inventory, at estimated cost 1000 10000001 1. Determine the estimated cost of the merchandise inventory of Celebrity Tan on August 28 by the retail method, presenting details of the computations. Celebrity Tan Cost of the Merchandise Inventory August 31 Merchandise inventory, August 1 Net purchases Merchandise available for sale Ratio of cost to retail price: Sales Merchandise inventory, August 31, at retail Merchandise inventory, at estimated cost Cost Retail 1000 000 2a. Estimate the cost of the merchandise inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations. Ranchworks Co. Cost of the Merchandise Inventory November 30 000* 2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $142,000 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March thru November? Previous Next