Valix Finacc vol 1 Problem 8-33

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-33

                                                                          cost      retail

1. Opening inventory                                                                         1,650,000       2,200,000

    Purchases                                                                                      3,700,000       4,950,000 

    Freight in                                                                                           200,000

    Purchase allowances                                                                  (   100,000)

    Departmental transfer – credit                                                    (   200,000)     (   300,000)

    Additional markup                                                                                                180,000

    Markup cancellation                                                                     ________                  (    30,000)

    Goods available for sale – conventional                                    5,250,000        7,000,000

            Cost ratio (5,250/7,000)                                    75%

    Markdown (500,000 – 400,000)                                                      ________                  (   100,000)

    Goods available for sale – average                                           5,250,000       6,900,000

    Less: Sales                                                                                    4,000,000

             Inventory shortage                                                                100,000       4,100,000

    Ending inventory at sales price                                                                         2,800,000

    Ending inventory at cost (2,800,000 x 75%)                                 2,100,000

2. Goods available for sale                                                                                   5,250,000

    Less: Ending inventory                                                                                       2,100,000

    Cost of sales                                                                                                                  3,150,000