San Lorenzo General Store uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of October 2021:
Cost Retail Beginning inventory $ 40,000 $ 55,000
Net purchases 21,425 32,100
Net markups 1,700
Net markdowns 1,050
Net sales 37,000
required
Estimated the average cost of ending inventory and cost of goods sold for october.

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nicof2010 nicof2010 · Answer 1 · 2020-04-25T06:15:30+02:00

Answer:

The average cost of ending inventory is $37,259 and cost of goods sold for october is 24,166

Explanation:

In order to calculate the average cost of ending inventory, we would have to calculate first the cost to retail ratio with the following formula:

cost to retail ratio=Total cost/Total retail

According to the given data, the total cost=$61,425, and the total retail= $87,100, Hence:

cost to retail ratio=$61,425/$87,100= 70.5%

Also, we have to calculate the ending inventory at retail=$87,100+$1,700-$1,050-$37,00=$52,850

Therefore, the average cost of ending inventory= $52,850×70.5%

=$37,259

To calculate the cost of goods sold for october we would have to use the following formula:

cost of goods sold=Beginning inventory+purchases-ending inventory

=$40,000+$21,425-$37,259

=$24,166

JMack123 JMack123 · Answer 2 · 2020-11-30T03:01:04+01:00

Answer:

Estimated ending inventory Retail = 42,750

Estimated ending inventory cost = 31,943.46

Estimated Cost of Goods Sold = 28,431.54

Explanation:

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