help INTERMEDIATE FINANCIAL REPORTING $1$

UNIT $3-$ TASK$-$BASED SIMULATION #$2$

Simulation $(15$ minutes$)$

Today's T$-$shirts Corp. $($TTC$)$ sells T$-$shirts for both children and adults in retail stores

across Nova Scotia. The controller has asked the senior accountant, Lucy, to estimate

the cost of ending inventory for the year ended September $30,$ Year $1.$ Lucy is aware

that there are two possible methods to estimate the cost of ending inventory and would

like to present both methods to the controller.

Lucy has collected the following information:

Appendix: Inventory report from warehouse manager $$ September $30,$ Year $1$

Complete the tasks in the Excel Task file. Appendix: Inventory report from warehouse manager $$ September $30,$ Year $1$

INVENTORY REPORT

September $30,$ Year $1$

$\backslash$table$[[,$Cost,Retail$],[$Beginning inventory,$$95,000,$$$128,000],[$Purchases$,414,000,542,000],[$Purchase discounts,$8,000,-],[$Purchase returns,$6,000,7,500],[$Freight$-$in$,4,000,-],[$Additional markups,$-,62,000],[$Markdowns$,-,39,000],[$Cancellation of markdowns,$-,11,000],[$Employee discounts,$-,1,500],[$Gross sales,$-,608,000],[$Sales returns and allowances,$-,41,000]]$

FROM THE DESK OF THE CONTROLLER

Our historical gross profit percentage has been $37\%$ Task $1$

First, Lucy wants to explain how inventory is estimated using the retail method, and then she will

prepare the calculation to determine the estimated cost of ending inventory under the retail

Instructions:

The following sentence ends in a section that is bolded. You must decide how to best complete

the sentence: you may leave the bolded comment in place $($choose option $1)$ or replace it with

an alternative comment from the drop$-$down list.

The retail method estimates the cost of endina inventory usina...

net income and total sales.

Select your answer

$1$ net income and total sales.

$\begin{array}{cc}2& \text{h}\text{i}\text{s}\text{t}\text{o}\text{r}\text{i}\text{c}\text{a}\text{l}\text{g}\text{r}\text{o}\text{s}\text{s}\text{p}\text{r}\text{o}\text{f}\text{i}\text{t}\text{p}\text{e}\text{r}\text{c}\text{e}\text{n}\text{t}\text{a}\text{g}\text{e}\text{a}\text{n}\text{d}\text{n}\text{e}\text{t}\text{s}\text{a}\text{l}\text{e}\text{s}\text{.}\end{array}$

$3$ the historical cost ratio, cost of goods available for sale $($CDGAS$)$ at retail, and net sales

$4$ the difference betweenopening inventory and net purchases.

$5$ the relationship between the cost of inventory and retail selling prices.

In Column A$,$ select the appropriate items to include in the calculation of cost of COGAS at

retail, net of markdowns.

In ColumnB, enter the corresponding amount for the item in Column A$.$ Enter additions as

positive amounts and subtractions as negative amounts. Round all amounts to the nearest

dollar or two decimal places for a percentage $(xx\%).$

If a row in the table is not needed to complete the calculation, enter $"$No futher additions" or $"$No

futher$-$deductions," as applicable, in Column $A,$ and enter zero in Column $B.$ Task $2$

Lucy will nest explain how inventory is estimated using the gross profit method, and then she will prepare

the calculation to determine the estimated cost of ending inventory under the gross profit method.

Instructions:

The following sentence ends in a section that is bolded. You must decide how to best complete the

sentence: you may leave the bolded comment in place $($choose option $1)$ or replace it with an

alternative comment.

The gross profit method estimates the cost of ending inventory using...

the relationship between the cost of inuentory and retail selling prices.

$\begin{array}{cc}\text{S}\text{e}\text{l}\text{e}\text{c}\text{t}\text{y}\text{o}\text{u}\text{r}\text{a}\text{n}\text{s}\text{w}\text{e}\text{r}& 1\end{array}$

In Column A$,$ select the appropriate items to include in the calculation of net sales.

In ColumnB, enter the corresponding amount for the item in Column A$.$ Enter additions as positive

amounts and subtractions as negative amounts. Round all amounts to the nearest dollar or nearest

whole number for a percentage $(xx\%).$

If a row in the table is not needed to complete the caloulation, enter $"$No further additienal deductions"

in Column A and enter zero in ColumnB.