Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 9, Problem 9.6BE
Gross profit method; solving for unknown
• LO9–2
Adams Corporation estimates that it lost $75,000 in inventory from a recent flood. The following information is available from the records of the company’s periodic inventory system: beginning inventory, $150,000; purchases and net sales from the beginning of the year through the date of the flood, $450,000 and $700,000, respectively. What is the company’s gross profit ratio?
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11:41
.l 89
A 9 gross profit rate in 2021 to be the same as in the previous
year, compute the estimated merchandise destroyed by the flood.
E 3-2 - Gross profit method (With entity policy on GPR)
The Thomas Corporation was organized on Jan. 1, 2020. On Dec. 31,
2021, the corporation lost most of its inventory in a warehouse fire
just before the year-end count of inventory was to take place.
from the records disclosed the following:
Data
2020
4,069,400
3,940,000
80,000
21%
2021
4,157,000
4,180,000
100,000
Goods available for sale
Sales
Sales returns and allowances
Gross profit rate
On Jan. 1, 2021, the Corporation's pricing policy was changed so that
the gross profit rate would be three percentage points higher than the
one earned in 2020.
Calculating Inventory Turnover [LO2] The Blue Moon Corporation has endinginventory of $407,534, and cost of goods sold for the year just ended was$4,105,612. What is the inventory turnover? The days’ sales in inventory? Howlong on average did a unit of inventory sit on the shelf before it was sold?
E6-21 Analyzing Gross Profit Percentage on the Basis of a Multi-step Income Statement [LO6-5]
The following summarized data were provided by the records of Mystery Incorporated for the year ended December 31:
Administrative Expense
$
19,000
Cost of Goods Sold
165,000
Income Tax Expense
17,600
Sales Returns and Allowances
7,000
Selling Expense
40,200
Sales of merchandise for cash
240,000
Sales of merchandise on credit
42,000
Required:1. Based on these data, prepare a multi-step income statement for internal reporting purposes.
2-a. What was the amount of gross profit?
2-b. What was the gross profit percentage?
2-c. Which of the following(s) is true? (Select all that apply.)
E6-21 Analyzing Gross Profit Percentage on the Basis of a Multi-step Income Statement [LO6-5]
The following summarized data were provided by the records of Mystery Incorporated for the year ended December 31:…
Chapter 9 Solutions
Intermediate Accounting, 10 Ed
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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- 10 A company has current assets that total $594,000, has a current ratio of 2.20, and uses the perpetual inventory method. Assume that the following transactions are then completed: (1) sold $12,200 in merchandise on short-term credit for $15,400, (2) declared but did not pay dividends of $52,000, (3) paid prepaid rent in the amount of $10,800, (4) paid previously declared dividends in the amount of $52,000, (5) collected an account receivable in the amount of $12,200, and (6) reclassified $43,000 of long-term debt as a current liability. ts еВook Required: Compute the updated current ratio after each transaction, by showing the cumulative effects of the transactions in the following table. (Round your answers to 2 decimal places.) Hint Current Ratio Print Transaction (1) Transaction (2) ferences Transaction (3) Transaction (4) Transaction (5) Transaction (6)arrow_forwardGross profit method 2. Northstar Sales Corp. was organized on January 1, 2001. On December 31, 2002, the company lost most of its inventory in a warehouse fire just before the year-end count of inventory was to take place. Data from the records disclosed the following: 2002 PO P173,120 692,000 64,600 2001 Inventory, January 1 Purchases during year Purchase returns and allowances during year Sales during year Sales returns and allowances during year 860,000 46,120 788,000 16,000 836,000 20,000 On January 1, 2002, Northstar's pricing policy was changed so that the gross profit rate would be 3 percentage points higher than the one earned in 2001. Salvaged undamaged merchandise was marked to sell at P24,000, while damaged merchandise marked to sell at P16,000 had an estimated net realizable value of P3,600. Requirement: Determine the company's inventory loss due to the fire that occurred on December 31, 2002. (Adapted)arrow_forwardDecrease in inventory $375Decrease in accounts payable 190Increase in notes payable 210Increase in accounts receivable 10510. Calculating Average Payables Period [LO2] Tortoise, Inc., had a cost of goodssold of $28,834. At the end of the year, the accounts payable balance was $6,105.How long on average did it take the company to pay off its suppliers during theyear? What might a large value for this ratio imply?arrow_forward
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