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SIMULATION 4 Chapter 9 Develop a response in either Word or Excel and follow the

ID: 2520156 • Letter: S

Question

SIMULATION 4

Chapter 9

Develop a response in either Word or Excel and follow the instructions outlined in the Assignments Menu for submission.

A. Under your guidance, as of January 1, 2012, the Little Corner Sporting Goods Store installed the retail method of accounting for its merchandise inventory.

      When you undertook the preparation of the store’s financial statements at June 30, 2012, the following data were available:

At Cost

At Retail

Inventory, January 1

$26,900

$40,000

Net Markdowns

4,000

Net Markups

15,000

Net Purchases

84,700

110,000

Net Sales

116,000

      REQUIRED:

      Prepare a schedule to compute the June 30, 2012 inventory under the dollar-value LIFO method, assuming a general price level increase from 100 at January 1, 2012 to 105 at June 30, 2012.

B. The Doll Company estimates the cost of its physical inventory at March 31, 2012 for use in an interim financial statement. The rate of markup on sales is 20%. The following account balances are available:

Inventory March 1, 2012

    $160,000

Purchases during March

         86,000

Purchase returns

           4,000

Sales during March

       140,000

         REQUIRED

Estimate the cost of inventory at March 31.

At Cost

At Retail

Inventory, January 1

$26,900

$40,000

Net Markdowns

4,000

Net Markups

15,000

Net Purchases

84,700

110,000

Net Sales

116,000

Explanation / Answer

Ans B Calculation of Closing Stock Opening Stock 160000 Add: Purchases 86000 Less Purchase return 4000 Less : sales at cost (140000-140000*.20) 112000 Closing Stock 130000