Adams Corporation uses a periodic inventory system and the retail inventory meth

Question

Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2018 Cost Retail $21,000 $39,080 Beginning inventory Net purchases Net sarkups Net markdowns Net sales 18,500 4,100 1,180 The company used the average cost flow method and estimated inventory at the end of September to be $16,32750. If the company had used the LIFO cost now method, the cost-to-retail percentage would have been 50%. Required: Compute net purchases at retail and net sales for the month of September Net purchases at retail Net sales

Explanation / Answer

Cost to Retail % = 50%

Goods Available at retail = $10500 * 100/50

= $21000

Calculation of Net Purchases at Retail :-

Calculation of Net Sales :-

Working Note 1 :-

Cost to Retail % = Total Cost / Total Retail

= $31500 / $60000

= $52.5%

Ending Inventory at Retail = Ending Inventory / 52.5%

= $16327.50 / 52.5%

= $31100

Particulars Amount ($) Goods Available at Retail $21000 Less : Markups ($4100) Add : Markdown $1100 Net Purchases at Retail $18000

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