Question

Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory...

Adams Corporation 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 September 2021:

 Cost Retail Beginning inventory \$ 29,000 \$ 46,000 Net purchases 14,500 ? Net markups 10,700 Net markdowns 2,700 Net sales ?

The company used the average cost flow method and estimated inventory at the end of September to be \$24,998.00. If the company had used the LIFO cost flow method, the cost-to-retail percentage would have been 50%.

Required:
Compute net purchases at retail and net sales for the month of September using the information provided. (Do not round your intermediate calculations.)

Cost to retail % = 50%

Goods available at retail = 14500 * 100 / 50 = \$29,000

Calculation of Net purchases at retail-

 Goods available at retail \$29,000 Less: Markups (10700) Add: Marks down 2700 Net purchases at retail \$21,000

Calculation of Net sales-

 Particulars Cost (\$) Retail (\$) Beginning Inventory 29000 46000 Add: Purchases 14500 21000 Add: Net markup 10700 Less: Net markdown (2700) 43,500 75,000 Net sales (balancing fig.) (31,900) Ending Inventory 43,100

Cost to Retail % = 43500 / 75,000 = 58.0%

Estimated Inventory at Retail = 24998 / 58% = 43,100

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