Scribd
Upload
3K views8 pages

Chap14 Problems

- Beginning with inventory and purchases, the document provides cost and retail figures for goods available, sales, markdowns, and ending inventory. - It then calculates the cost ratio based on total cost and retail values. Using the cost ratio and ending inventory at retail, it determines the conservative cost of ending inventory. - The document contains the details of multiple inventory-related word problems, showing the calculations to determine beginning inventory, purchases, markup/markdown, cost ratio, sales, and ending inventory values at both cost and retail.

Uploaded by

Yen Yen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
3K views8 pages

Chap14 Problems

- Beginning with inventory and purchases, the document provides cost and retail figures for goods available, sales, markdowns, and ending inventory. - It then calculates the cost ratio based on total cost and retail values. Using the cost ratio and ending inventory at retail, it determines the conservative cost of ending inventory. - The document contains the details of multiple inventory-related word problems, showing the calculations to determine beginning inventory, purchases, markup/markdown, cost ratio, sales, and ending inventory values at both cost and retail.

Uploaded by

Yen Yen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
  • Problem 14-2
  • Problem 14-3
  • Problem 14-4
  • Problem 14-5
  • Problem 14-6
  • Problem 14-7
  • Problem 14-8
  • Problem 14-9

Problem 14-2

Beginning inventory 180,000


Purchases 6,000,000
Purchase returns (300,000)
Net markup 900,000
Net markdown (140,000)
GAS at retail 6,640,000
Less:
Sales 3,600,000
Sales return (90,000)
Employee discounts 80,000
Normal shortage 130,000
Abnormal shortage 200,000 3,920,000
Ending inventory at retail 2,720,000
Problem 14-3
Answer: B

COST RETAIL
Beginning Inventory 280,000 700,000
Purchases 2,480,000 5,160,000
Freight In 75,000 -
Markup - 500,000
Markup cancellations - (60,000)
Goods available for sale 2,835,000 6,300,000
Cost ratio (2.835M / 6.3M) 40%
Deduct:
Markdown (250,000)
Markdown cancellations - 50,000
Goods available for sale - average 2,835,000 6,100,000
Sales (5,000,000)
Shrinkage (2% x 5M) (100,000)
Ending Inventory, at retail 1,000,000

Conservative cost (1M x 45%) 450,000

The approximate lower of average cost or market retail is the same as the conservative
or conventional retail.
Problem 14-4
Answer: C
Cost Retail
Inventory - Jan. 1 720,000 1,000,000
Purchases 4,080,000 6,300,000
Mark up 700,000
Mark down (500,000)
Goods available for sale 4,800,000 7,500,000

Cost ratio (4,800 / 7,500) 64%

Sales (5,900,000)
Normal shrinkage & breakage (100,000)
Inventory 1,500,000

Average cost (1.5M x 64%) 960,000


Problem 14-5
Answer: D
Cost Retail
Beginning inventory & purchases 6,000,000 9,200,000
Net markup 400,000
Goods available for sale 6,000,000 9,600,000

Cost ratio (6,000 / 9,600) 62.50%

Sales (7,800,000)
Net markdown (600,000)
Ending inventory 1,200,000

Conservative cost (1.2M x 62.5%) 750,000

Goods available for sale 6,000,000


Less: ending inventory 750,000
Cost of sales 5,250,000
Problem 14-6
Answer: C
Cost Retail
Inventory - Jan. 1 560,000 1,000,000
Purchases 4,000,000 6,200,000
Markup (5,000 x P100) 500,000
Markup cancellation (1,000 x P100) - (100,000)
Goods available 60% 4,560,000 7,600,000
Markdown (reduction in retail price) - (200,000)
Goods available - average 62% 4,560,000 7,400,000
Net sales (5,400,000)
Inventory - December 31 2,000,000

Conservative cost (62% x 2M) 1,240,000


Problem 14-7
Answer: A
Cost Retail
Beginning inventory 600,000 1,500,000

Purchases 3,000,000 5,500,000


Net additional markup 500,000
Net markdown - (1,000,000)
Net purchases 3,000,000 5,000,000
Cost ratio (3M / 5M) 60%
Goods available for sale 3,600,000 6,500,000
Sales (4,500,000)
Ending inventory at retail 2,000,000

FIFO cost (2,000,000*60%) = 1,200,000


Problem 14-8
Answer: A
COST RETAIL
Beg. Inventory 1,200,000 1,800,000

Purchases 5,600,000 7,200,000


Freight In 400,000
Net Mark Up 1,400,000
Net Mark Down - (600,000)
NET PURCHASES 6,000,000 8,000,000

CURRENT YEAR COST RATIO:


6M/8M = 75 %

Goods Avail for Sale 7,200,000 9,800,000


LESS: Sales (7,600,000)
ENDING INV. RETAIL 2,200,000
FIFO COST 2,200,000 75% 1,650,000

Goods Available for Sale 7,200,000


LESS: Inventory - Dec. 31 (1,650,000)
COST OF GOODS SOLD 5,550,000
Problem 14-9
Answer: C
Cost Retail
Available for sale 4,900,000 7,000,000
Markdown (100,000)
Sales (5,500,000)
Inventory, December 31 1,400,000
Average cost (1.4M x 71%) 994,000

Cost ratio (4.9M / 6.9M) 71%

You might also like