Valix Finacc vol 1 Problem 8-31

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-31

                                                                                                       Cost                    Retail

Beginning inventory                                                                        340,000                640,000

Purchases                                                                                     4,500,000             7,300,000

Freight in                                                                                         100,000

Purchase returns                                                                         (   150,000)           (   250,000)

Purchase allowances                                                                 (     90,000)

Departmental transfer in                                                               100,000                160,000

Markup                                                                                        ________               150,000

Goods available for sale – conventional                                   4,800,000             8,000,000

        Cost ratio (4,800/8,000)                                       60%

Markdown                                                                                    ________         (   500,000)

Goods available for sale – average                                           4,800,000            7,500,000

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

Less: Sales                                                                                    6,600,000

        Employee discount                                                                100,000

        Spoilage and breakage                                                         200,000            6,900,000

Ending inventory                                                                                                     600,000

Conservative cost (600,000 x 60%)                                                360,000

Average cost         (600,000 x 64%)                                               384,000