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Retail Method; Gross Profit Method

Selected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows:

	Cost		Retail
Celebrity Tan
Merchandise inventory, August 1	$300,000		$575,000
Transactions during August:
Purchases (net)	2,149,000		3,375,000
Sales			3,170,000
Ranchworks Co.
Merchandise inventory, March 1	$880,000
Transactions during March thru October:
Purchases (net)	9,500,000
Sales	15,800,000
Estimated gross profit rate	38%

Required:

1. Determine the estimated cost of the merchandise inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations.

Celebrity Tan
Cost of the Merchandise Inventory
August 31
		Cost	Retail
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			$

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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
		Cost
Merchandise inventory, March 1		$
Net purchases
Merchandise available for sale		$
Sales	$
Less estimated gross profit
Estimated cost of merchandise sold
Estimated merchandise inventory, November 30		$

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2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $369,750 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through November? $

Retail Method; Gross Profit Method Selected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Cost Retail Celebrity Tan Merchandise inventory, August 1 $300,000 $575,000 Transactions during August: Purchases (net) 2,149,000 3,375,000 3,170,000 Sales Ranchworks Co. $880,000 Merchandise inventory, March 1 Transactions during March thru October: Purchases (net) 9,500,000 15,800,000 Sales Estimated gross profit rate 38% Required: 1. Determine the estimated cost of the merchandise inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations. Celebrity Tan Cost of the Merchandise Inventory August 31 Retail 575,000 Merchandise inventory, August 1 Cost 300,000 2,149,000 $ $ Net purchases 3,375,000 Merchandise available for sale $ 2,449,000 $ 3,950,000 Ratio of cost to retail price: 38 % x Sales 3,170,000 Merchandise inventory, August 31, at retail Merchandise inventory, at estimated cost Feedback Check My Work 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 Cost Merchandise inventory, March 1 880,000 Net purchases 9,500,000 Merchandise available for sale 10,380,000 Sales $ 15,800,000 Less estimated gross profit Estimated cost of merchandise sold Estimated merchandise inventory, November 30 Feedback Check My Work 2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $369,750 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through November