Presented below is information related to Bobby Engram Company.   00Cost00 0 Retail0  Beginning inventory $058,000 $100,000 Purchases (net) 122,000 200,000 Net markups   10,345 Net markdowns   26,135 Sales revenue   186,000 Instructions a.    Compute the ending inventory at retail. b.    Compute a cost-to-retail percentage (round to two decimals) under the following conditions. 1.    Excluding both markups and markdowns. 2.    Excluding markups but including markdowns. 3.    Excluding markdowns but including markups. 4.    Including both markdowns and markups. c.    Which of the methods in (b) above (1, 2, 3, or 4) does the following? 1.    Provides the most conservative estimate of ending inventory. 2.    Provides an approximation of lower-of-cost-or-market. 3.    Is used in the conventional retail method. d.    Compute ending inventory at lower-of-cost-or-market (round to nearest dollar). e.    Compute cost of goods sold based on (d). f.    Compute gross margin based on (d).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Presented below is information related to Bobby Engram Company.

 
00Cost00
0 Retail0 
Beginning inventory
$058,000
$100,000
Purchases (net)
122,000
200,000
Net markups  
10,345
Net markdowns  
26,135
Sales revenue  
186,000

Instructions

a.    Compute the ending inventory at retail.

b.    Compute a cost-to-retail percentage (round to two decimals) under the following conditions.

1.    Excluding both markups and markdowns.

2.    Excluding markups but including markdowns.

3.    Excluding markdowns but including markups.

4.    Including both markdowns and markups.

c.    Which of the methods in (b) above (1, 2, 3, or 4) does the following?

1.    Provides the most conservative estimate of ending inventory.

2.    Provides an approximation of lower-of-cost-or-market.

3.    Is used in the conventional retail method.

d.    Compute ending inventory at lower-of-cost-or-market (round to nearest dollar).

e.    Compute cost of goods sold based on (d).

f.    Compute gross margin based on (d).

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