Table Ex.: We made a table; it cost us $40 to make. We can sell it for $65, the cost to do so would be $7. Normal profit is 30% of sales. The replacement cost is $39. Purchase Commitments Ex.: We promised to pay $100/unit for 1,000 units of a good. Now, prior to the purchase, the market falls to $80. Basket Ex.: Buy land for $40 mil. Will develop a golf course (est price $28 mil) and 300 building lots (est price $100,000 each). Gross Profit Method Ex.: Beg. Invent $100,000 Purchases 300,000 Sales were $500,000 and GP as of sales is 258. ending inventory. Calculate Gross Profit Method Ex.: What if GP as of cost is 25? Retail Method Ex.: Beg. Invent Purchases -Purch. Returns -Purch discounts Freight-In +Markups -Markup Cancel. -Abnormal Shortage Cost $20,000 200,000 -5,000 -1,000 +6,000 0 0 -4,000 216,000 Retail $40,000 400,000 -10,000 0 0 25,000 -9,000 -8,000 438,000 -Markdowns +Markdown Cancel. =c/g/avail/sale 0 0 216,000 -35,000 +10,000 413,000 -Sales +sales returns -Employee disc. -Normal shortage =End. Invent. ? ? 0 0 ?? -350,000 15,000 -10,000 -10,000 $ 58,000