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	$292,000		$384,000
Transactions during August:
Purchases (net)	3,356,000		4,416,000
Sales			4,543,000
Ranchworks Co.
Merchandise inventory, March 1	$328,000
Transactions during March through November:
Purchases (net)	4,357,000
Sales	6,507,000
Estimated gross profit rate	32%

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
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			$

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
		$
		$
	$
		$

2b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that $244,600 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March thru November? $