Homework SourseCost Retail 1 Jan Beg Inv 9002200 11561000 COGP 5022500
| @ Cost | @ Retail | ||||||||||||||
| 1 Jan Beg Inv | $ 90,022.00 | $ 115,610.00 | |||||||||||||
| COGP | $ 502,250.00 | $ 761,830.00 | |||||||||||||
| NET SALES | $ 778,840.00 | ||||||||||||||
| A YEAREND PHYSICAL INVENTORY AT RETAIL PRICES YIELDS A TOTAL INVENTORY OF $80450. PREPARE A CALCULATION SHOWING THE COMPANY\'S LOSS FROM SHRINKAGE AT COST AND AT RETAIL |
| @ Cost | @ Retail | ||||||||||||||
| 1 Jan Beg Inv | $ 90,022.00 | $ 115,610.00 | |||||||||||||
| COGP | $ 502,250.00 | $ 761,830.00 | |||||||||||||
| NET SALES | $ 778,840.00 | ||||||||||||||
| A YEAREND PHYSICAL INVENTORY AT RETAIL PRICES YIELDS A TOTAL INVENTORY OF $80450. PREPARE A CALCULATION SHOWING THE COMPANY\'S LOSS FROM SHRINKAGE AT COST AND AT RETAIL |
Solution
In order to compute “Inventory Shortage at Cost” and “Inventory Shortage at Retail”, we would need ending inventory and goods available for sale at cost as well as at retail price.
Particulars
At Cost
At Retail
Beginning Inventory
90,022.00
115,610.00
Add: Cost of Goods Purchased
502,250.00
761,830.00
Goods Available for Sale
592,272.00
877,440.00
Less: Net Sales
778,840.00
Ending Inventory
98,600.00
Cost to Retail Ratio = 592,272.00 / 877,440.00 = 0.675 or 67.50%
Ending Inventory at Cost = Ending Inventory at Retail x Cost to Retail Ratio
=> 98,600 x 67.5% = 66,555.00
Now, we will compute the “Inventory Shortage at Cost” and “Inventory Shortage at Retail”, which is shown below:
Inventory Shortage
At Cost
At Retail
Ending Inventory
66,555.00
98,600.00
Physical Inventory
54,303.75
80,450.00
Physical Inventory at cost = Physical inventory at retail x Cost to retail ratio
=> 80,450 x 67.5% = 54,303.75
| Particulars | At Cost | At Retail |
| Beginning Inventory | 90,022.00 | 115,610.00 |
| Add: Cost of Goods Purchased | 502,250.00 | 761,830.00 |
| Goods Available for Sale | 592,272.00 | 877,440.00 |
| Less: Net Sales | 778,840.00 | |
| Ending Inventory | 98,600.00 |
