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 \$ 21,400 \$ 38,600 Net purchases 10,700 ? Net markups 8,500 Net markdowns 2,500 Net sales ?

The company used the average cost flow method and estimated inventory at the end of September to be \$17,120.00. 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 = \$10,700 × 100/50 = \$21,400

Step 1 :

Calculation of net purchases at retail

 Particulars Amount Goods available at retail 21,400 Less : Markups (8,500) Add: Mark down 2,500 Net purchases at retail 15,400

Step 2 : calculation of net sales

 Particulars cost retail Beginning inventory 21,400 38,600 Add : purchases 10,700 15,400 Add: net markup 8,500 Less : net markdown (2,500) 32,100 60,000 Net sales(balancing figure) (28,000) Ending inventory (17,120 /53.5%) 32,000

Note : Cost to retail = 32,100 / 60,000 = 53.5%

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