Valix Finacc vol 1 Problem 8-34

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-34

                                                                                                                                                       Cost                 Retail

Inventory, January 1                                                                            560,000         1,000,000

Purchases                                                                                          4,000,000         6,200,000

Markup (5,000 x 100)                                                                                                   500,000

Markup cancelation (1,000 x 100)                                                     _________       (   100,000)

Goods available for sale – conservative                    (60%)              4,560,000        7,600,000

Markdown                                                                                        _________       (   475,000)

Goods available for sale – average                           (64%)              4,560,000        7,125,000

Net sales                                                                                                                 (5,200,000)

Inventory, December 31                                                                                          1,925,000

Conservative cost (1,925,000 x 60%)                                                  1,155,000

Average cost         (1,925,000 x 64%)                                                  1,232,000