Phillips Supply uses a periodic inventory system but needs to determine the appr
ID: 2395417 • Letter: P
Question
Phillips Supply uses a periodic inventory system but needs to determine the approximate amount of inventory at the end of each month without taking a physical inventory. Phillips has provided the following inventory data Cost Price $300,000 Retail Selling Price 501,000 Inventory of merchandise, June 30 Purchases during July doods available for sale during July Net sales during July ?5506,000 370,000 a. Estimate the cost of goods sold and the cost of the July 31 ending inventory using the retail method of evaluation. (Round your intermediate calculations to 2 decimal places.)Explanation / Answer
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Retail method of evaluation Cost Ratio 520000/906000 57.40% Part a Estimated Cost of goods sold 370000*Cost Ratio 212362 Part b Cost of goods available for sale 520000 Less: Estimated cost of goods sold 212362 Cost of Ending Inventory 307638