Question

A retailer’s inventory shows the following figures:

Opening Physical Inventory.. $195,000

Purchases.. $254,000

Net Sales.. $325,000

Customer Returns.. $41,000

Returns to Vendor.. $15,000

Markdowns.. $63,000

Markdown Cancellations.. $8,000

Employee Discounts.. $4,000

Additional Markups.. $5,000

Closing Physical Inventory.. $99,500

What was the shortage/overage dollars and percentage (round your final % answer to two decimal places)?

	A.	$3,000 Shortage; 0.92% Shortage
	B.	$3,500 Shortage; 1.08% Shortage
	C.	$3,000 Overage; 0.92% Overage
	D.	$3,500 Overage; 1.08% Overage

Answer 1

SOLUTION

Correct option is - $3,500 Overage; 1.08% Overage

Calculation of book inventory-

Particulars	Amount ($)
Opening physical inventory	195,000
Add: Purchases	254,000
Customer Returns	41,000
Markdown Cancellations	8,000
Additional Markups	5,000
Less: Net sales	(325,000)
Returns to Vendor	(15,000)
Markdowns	(63,000)
Employee Discounts	(4,000)
Book inventory	96,000

Shortage / Overage of inventory Dollar-

	Amount ($)
Book inventory	96,000
Closing Physical Inventory	99,500
Overage of inventory	3,500

Percentage= 3,500 / 325,000 = 1.08%