Problem 1

Inventory
June 31, 2020 July 1, 2020
Unadjusted Balances 100,000
a -
b -
a -
b -
c -
d -
Adjusted Balances 100,000
(1)

(4) Inventory, July 1, 2020

Add: Purchases
GAFS
Less: Inventory, June 30, 2021
Adjusted COGS

Problem 2
Cost
Beginning Inventory 1,100,000
Purchases 15,000,000
Freight in 200,000
Purchase returns 600,000
Purchases allowance 300,000
Departmental transfer in 400,000
Net mark ups
Net mark downs

Sales, gross of employee discounts

Sales returns
Sales discounts
Employee discounts
Loss from breakage

Average Method
Cost
Beginning Inventory 1,100,000
Purchases 15,000,000
 Freight in 200,000
Purchase returns (600,000)
Purchases allowance (300,000)
Departmental transfer in 400,000
Net mark ups
Net mark downs
GAFS 15,800,000

(1) Cost Ratio: 59%

(2) GAFS @ Retail

Less:
Sales 24,700,000
Sales returns (350,000)
Loss from breakage 50,000
Estimated ending inventory @ retail
(Note: Estimated ending Inventory amount is constant for all methods)

(3) Estimated ending inventory @ cost (3m x 59%)

(4) GAFS @ Cost

Less: Estimated Ending Inventory @ cost
Estimated COGS

FIFO Method
Cost
Beginning Inventory
Purchases 15,000,000
Freight in 200,000
Purchase returns (600,000)
Purchases allowance (300,000)
Departmental transfer in 400,000
Net mark ups
Net mark downs
GAFS 14,700,000

(1) Cost Ratio: = 60%

(2) GAFS @ Retail

Less:
Sales 24,700,000
Sales returns (350,000)
Loss from breakage 50,000
Estimated ending inventory @ retail
(Note: Estimated ending Inventory amount is constant for all methods)

(3) Estimated ending inventory @ cost

(4) GAFS @ Cost
Less: Estimated Ending Inventory @ cost
Estimated COGS

Conservative Method
Cost
Beginning Inventory 1,100,000
Purchases 15,000,000
Freight in 200,000
Purchase returns (600,000)
Purchases allowance (300,000)
Departmental transfer in 400,000
Net mark ups
Net mark downs
GAFS 15,800,000

(1) Cost Ratio = 57%

(2) GAFS @ Retail

Less:
Sales 24,700,000
Sales returns (350,000)
Loss from breakage 50,000
Estimated ending inventory @ retail
(Note: Estimated ending Inventory amount is constant for all methods)

(3) Estimated ending inventory @ cost

(4) GAFS @ Cost

Less: Estimated Ending Inventory @ cost
Estimated COGS

Inventory
June 30, 2020 July 1, 2020
 100,000 125,000
FOB Shipping Point (25,000) 75,000
50,000
125,000 200,000
75,000
FOB Destination Point
 Inventory
Purchases June 30, 2021 July 1, 2021
900,000 300,000 45,000
(20,000) -
(15,000) -
- -
(18,000) -
- -
- -
847,000 300,000
(2) (3)

100,000
847,000
947,000
300,000
647,000

Retail
2,200,000
25,000,000

1,000,000

800,000
600,000
900,000

24,700,000
350,000
200,000
600,000
50,000

Retail
2,200,000
25,000,000
 (1,000,000)

800,000
600,000
(900,000)
26,700,000

26,700,000

24,400,000
2,300,000
s constant for all methods)

1,357,000

15,800,000
1,357,000
14,443,000

Retail

25,000,000

(1,000,000)

800,000
600,000
(900,000)
24,500,000

26,700,000

24,400,000
2,300,000
s constant for all methods)

1,380,000
 15,800,000
1,380,000
14,420,000

od
Retail
2,200,000
25,000,000

(1,000,000)

800,000
600,000

27,600,000

26,700,000

24,400,000
2,300,000
s constant for all methods)

1,311,000

15,800,000
1,311,000
14,489,000

2,020 Inventory
Purchases June 30, 2021 July 1, 2021
 239,000 279,000
50,000 (15,000) Purchase returns
55,000 100,000 Purchase

15,000 25,000 Purchase

(20,000) (28,000) (80,000) sales
10,000
broken 1k 279,000

Ne 307,000 379,000
Don 279,000 379,000