Presented below is information related to Bobby Engram Company. Compute the endi
ID: 2490751 • Letter: P
Question
Presented below is information related to Bobby Engram Company. Compute the ending inventory at retail. Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%) Which of the methods in (b) above does the following? Compute ending inventory at lower-of-cost-or-market. (Round ratio to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.) Compute cost of goods sold based on (d). (Round answer to 0 decimal places, e.g. 6,225.) Compute gross margin based on (d). (Round answer to 0 decimal places, e.g. 6,225.) Which of the methods in (b) above does the following? Compute cost of goods sold based on (d). (Round answer to 0 decimal places, e.g. 6,225.) Compute gross margin based on (d). (Round answer to 0 decimal places, e.g. 6,225.)Explanation / Answer
Particulars:::::::::::::::::::::::::::::::::::::Retail
Beginning Inventory:::::::::::::::::::::::$100,000
ADD:
Purchases:::::::::::::::::::::::::::::::::::$200,000
Net mark up::::::::::::::::::::::::::::::::$10,345
_____________________________________
Totals::::::::::::::::::::::::::::::::::::::::$310,345
Less:
Net marks down::::::::::::::::::::::::::$26,135
___________________________________
Sales price of goods available:::::::$284,210
Less:
Sales Revenue::::::::::::::::::::::::::::$186,000
_____________________________________
Ending Inventory::::::::::::::::::::::::::$98,210
_________________________________________________________________________________
Cost to retail percentage
Excluding both mark up and mark down
Particulars::::::::::::::::::::::::::Cost:::::::::::::::::Retail
Beginning Inventory:::::::::$58,000::::::::::::::$100,000
ADD: Purchase::::::::::::::$122,000::::::::::::$200,000
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Total:::::::::::::::::::::::::::::$180,000::::::::::::$300,000
Ratio:Cost / REtail
=$180,000 / $300,000
=60%
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b)Excluding mark up but including mark down
Particulars::::::::::::::::::::::::::Cost:::::::::::::::::Retail
Beginning Inventory:::::::::$58,000::::::::::::::$100,000
ADD: Purchase::::::::::::::$122,000::::::::::::$200,000
Less:Mark downs::::::::::::::Nil::::::::::::::::::::$26,135
__________________________________________
Total:::::::::::::::::::::::::::::$180,000::::::::::::$273,865
Ratio:Cost / REtail
=$180,000 / $273,865
=65.72%
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Excluding mark down but including mark up
Particulars::::::::::::::::::::::::::Cost:::::::::::::::::Retail
Beginning Inventory:::::::::$58,000::::::::::::::$100,000
ADD:
Purchase:::::::::::::::::::::::$122,000::::::::::::$200,000
Net mark up::::::::::::::::::::::NIL::::::::::::::::::$10,345
___________________________________________
Totals::::::::::::::::::::::::::$180,000::::::::::::::$310,345
Ratio:Cost / REtail
=$180,000 / $310,345
=57.99% rounding off to 58%
____________________________________________________________________________
Including both mark up and mark down
Particulars::::::::::::::::::::::::::Cost:::::::::::::::::Retail
Beginning Inventory:::::::::$58,000::::::::::::::$100,000
ADD:
Purchase::::::::::::::::::::::::$122,000::::::::::::$200,000
Net mark up::::::::::::::::::::::NIL::::::::::::::::::$10,345
Less:
Mark downs:::::::::::::::::::::Nil::::::::::::::::::::$26,135
__________________________________________
Totals::::::::::::::::::::::::::$180,000::::::::::::::$284,210
Ratio:Cost / REtail
=$180,000 / $284,210
=63.33%
_______________________________________________________________________
c) Methods were used for all three is Excluding mark down but including mark up
1) Provides most estimate
2) ;Lower of cost or martket
3) Retail method
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d) Ending inventory Lower of cost or market
$98,210 * 58 /100
=$56961.80
__________________________________________________________________________
e)Cost of goods sold based d
Cost of goods sold = Beginnign Inventory + Purchases - Ending Inventory
= $58,000 + $122,000 - $56961.80
=$123,038.20
_____________________________________________________________________________
f) Gross margin based on d
Gross margin = Sales Revenue - Cost of Goods Sold
=$186,000 - $123,038.20
=$62,961.80
_______________________________________________________________________________
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