Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Chapter 7, Problem 4P
1
To determine
Compute the ending inventory at cost using the retail method.
2
To determine
Determine the manner of reducing the retail value at store using the cost to retail ratio.
3
To determine
Compute the amount of shrinkage at cost and retail.
4
To determine
Analyze the reasons for efficiency in using the retail method by the retail chains.
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Students have asked these similar questions
You are called by Tim Duncan of Shamrock Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that
took place the night before. You suggest that an inventory be taken immediately. The following data are available.
Inventory, July 1
Purchases-goods placed in stock July 1-15
Sales revenue-goods delivered to customers (gross)
Sales returns-goods returned to stock
$36,600
81,300
119,400
Your client reports that the goods on hand on July 16 cost $31,300, but you determine that this figure includes goods of
$6,300 received on a consignment basis. Your past records show that sales are made at approximately 60% over cost. Duncan's
insurance covers only goods owned.
Claim against the insurance company $
3,600
Compute the claim against the insurance company. (Round ratios for computational purposes to 3 decimal places, e.g. 78.736% and
final answer to O decimal places, e.g. 28,987.)
LA
26700
Record general journal entries to correct the errors described below. Assume that the incorrect entries were posted in the same period in which the errors occurred and were recorded using the periodic inventory system. Round your answers to the nearest cent.
A freight cost of $85 incurred on equipment purchased for use in the business was debited to Freight In.
The issuance of a credit memo to Lang Company for $119 for merchandise returned was recorded as a debit to Purchases Returns and Allowances and a credit to Accounts Receivable, Lang Company.
A cash sale of $68 to J. L. LaSalle was recorded as a sale on account.
A purchase of merchandise from James Company in the amount of $750 with a 25 percent trade discount was recorded as a debit to Purchases and a credit to Accounts Payable of $750 each.
Muller Computers stores its inventory in a warehouse that burned to the
ground in late November, 2018. Their sales office was at a different location.
In order to file a claim with their insurance, the owners ask you to estimate the
inventory that was in the warehouse. The following information is available:
Beginning inventory
Purchases through November 30
Net sales revenue through November 30
$375,500
470,250
793,000
The company's gross profit has historically been 40% of net sales revenue.
Estimate the value of the inventory destroyed in the fire using the gross profit
method.
a. $388,450
b. $410,000
c. $369,950
d. $528,550
Chapter 7 Solutions
Principles of Accounting
Ch. 7 - Prob. 1DQCh. 7 - Which of the following methods do not require a...Ch. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 1SECh. 7 - Assume the following data with regard to inventory...Ch. 7 - Prob. 3SE
Ch. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 1EACh. 7 - Prob. 2EACh. 7 - Prob. 3EACh. 7 - Prob. 4EACh. 7 - Prob. 5EACh. 7 - Prob. 6EACh. 7 - During July 2014, Micanopy, Inc., sold 500 units...Ch. 7 - Prob. 8EACh. 7 - Prob. 9EACh. 7 - Prob. 10EACh. 7 - Prob. 11EACh. 7 - Prob. 12EACh. 7 - Midori Company merchandises a single product...Ch. 7 - The inventory of Wood4Fun and data on purchases...Ch. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6APCh. 7 - DiPaolos inventory, purchases, and sales for March...Ch. 7 - Prob. 8APCh. 7 - Prob. 9APCh. 7 - Zubac Company is a large retail furniture company...Ch. 7 - Prob. 1CCh. 7 - Prob. 2CCh. 7 - ExxonMobil Corporation had net income of 41.0...Ch. 7 - Prob. 4CCh. 7 - JCPenney, a large retail company with many stores,...
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