Retail Method; Gross Profit Method

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

		Cost		Retail
Celebrity Tan Co.
Inventory, August 1		$397,000		$584,000
Transactions during August
	Purchases (net)	4,567,000		6,716,000
	Sales			6,909,000
Ranchworks Co.
Inventory, March 1		$250,000
Transactions during March through November:
	Purchases (net)	3,315,000
	Sales	5,181,000
Estimated gross profit rate		35%

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

Cost

Retail

Celebrity Tan Co.

Inventory, August 1

$ 270,000

$ 600,000

Transactions during August:

Purchases (net)

2,247,200

3,460,000

Sales

3,275,000

Ranchworks Co.

Inventory, March 1

$875,000

Transactions during March through November:

Purchases (net)

9,310,000

Sales

15,050,000

Estimated gross profit rate

40%

Required:

1.

Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method.* Enter all ratios as percents, rounded to one decimal place.

Amount Descriptions

Estimated cost of goods sold

Estimated gross profit

Estimated inventory,November 30

Estimated loss due to theft or damage, August

Estimated loss due to theft or damage, March 1November 30

Inventory, August 1

Inventory, August 31, at retail

Inventory, August 31, at estimated cost

Inventory, March 1

Merchandise available for sale

Purchases for March-November (net)

Purchases in August (net)

Physical inventory count, August 31

Physical inventory count, November 30

Sales for August

Sales for March-November

a.	Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross profit method.*
b.	Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $366,500 of inventory was on hand. What was the estimated loss of inventory due to theft or damage during March through November?
	* Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

2. b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $366,500 of inventory was on hand.

What was the estimated loss of inventory due to theft or damage during March through November? If a net loss has been incurred, enter that amount as a negative number using a minus sign.

Retail Method 1. Determine the estimated cost of the inventory of Celebrity Tan Co on August 31 by the retail method. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter all ratios as percents, rounded to one decimal place Celebrity Tan Co Estimated Cost of Inventory August 31 Retail 5 Ratio of cost to retail price: Gross Profit Method 2. a. Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross profit method. Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter all ratios as percents, rounded to one decimal place. Ranchworks Co. Estimated Cost of Inventory November 30 Cost