Question

9. Petcetera had a robbery on the weekend in which a large amount of inventory was taken. The loss is covered completely by insurance. A physical inventory count determined that the cost of the remaining merchandise is $58,500. The following additional information is available:

Beginning merchandise inventory .............. at cost : 75,000 at retail 93,750

Purchase returns and allowances............... at cost : 15,000 at retail 20,000

Purchases ................................................ at cost : 1,275,000 at retail 1,731,250

Transportation-in....................................... at cost : 18,750

Sales ....................................................... at retail 93,750

Sales returns and allowances.................... retail 93,750

Question :

1. Prepare an estimate of ending merchandise inventory using the retail method.

2. Calculate the cost of the stolen inventory.

Answer 1

Please find below table useful to compute desired results: -

End results would be as follows: -