106) Smart-T Incorporated had sales and cost of sales of $1,850,000 and $1,100,000 respectively in 2011. The company had shareholders equity of $925,000, liabilities of $775,000 and assets of $1,125,000. Included in Smart-T's assets was inventory valued at $100,000 which was a $50,000 increase from the previous year's holdings.
Calculate Smart-T's gross profit percentage and inventory turn over for 2011.
107) Late on the night of August 30, 2011, an angry employee set a torch to the Family Business Ltd. warehouse, which was full of inventory. Luckily the accounting records were stored in another facility and not destroyed in the fire. Family Business Ltd. is in the process of filing a claim with its insurance company for the inventory loss due to the fire. Estimate the value of the inventory destroyed in the fire using the gross margin method.
Beginning inventory$428,000
Purchases through August 30, 2011690,500
Net sales through August 30, 20111,335,000
The gross margin rate historically has been 40% of net sales
108) The Tasty Shrimp Limited's warehouse was recently flooded. The controller has asked you to estimate the inventory loss. You have managed to salvage the following number from the general office for the month of July. Note the operation was closed on July 1st for Canada Day.
Sales$660,000
Inventory June 30$500,000
Purchases July$125,500
Purchases June$110,250
Gross Profit Rate55%
109) Determine the effect on cost of goods sold, total assets, and gross margin for 2010 and 2011 if the following inventory errors are not corrected. Indicate your answer with (+) for overstated, (-) for understated, and (0) for no effect.
a. Beginning inventory for 2010 is understated
b. Beginning inventory for 2010 is overstated
c. Ending inventory for 2010 is understated
d. Ending inventory for 2010 is overstated
Effect in 2010 on
Cost of Goods SoldTotal AssetsGross Margin
a.
b.
c.
d.
Effect in 2011 on
Cost of Goods SoldTotal AssetsGross Margin
a.
b.
c.
d.
110) The following data are available for Franchise Corporation:
Product AProduct BProduct C
Beginning inventory$ 5,000$20,000$15,000
Net purchases 45,00055,00053,000
Goods available for sale 50,00075,00068,000
Ending inventory17,00015,0007,000
Cost of goods sold33,00060,00061,000