Sparrow Company uses the retail inventory method to estimate ending inventory an

Question

Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2011 are as follows:


Cost Retail
Beginning inventory $ 80,000 $ 160,000
Purchases 323,000 516,800
Freight-in 9,100
Purchase returns 6,700 10,300
Net markups 16,500
Net markdowns 11,300
Normal spoilage 2,800
Abnormal spoilage 4,400 7,800
Sales 475,456
Sales returns 10,200

The company records sales net of employee discounts. Discounts for 2011 totaled $3,700.

Required:
(1) Estimate Sparrow

Explanation / Answer

Just for hint: COGS should be a raw figure. Sales less purchases at cost. 450,432 less 306,000 $ 144, 432 Other numbers reflect the cost of doing business.. That would impact on the P & L statement.

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