1. Utley Co. prepares monthly income statements. Inventory is counted only at year end; thus,
month-end inventories must be estimated. The rate of mark-up on cost is 20%. The following
information relates to the month of May.
Sales during May
$90,000
Inventory, May 1
45,000
Purchases during May
58,000
Instruction:
Calculate the estimated cost of the inventory on May 31.
I
2. When you undertook the preparation of the financial statements for Telfer Company at
January 31, 2020, the following data were available:
Inventory, February 1, 2019
Markdowns
Markups
Purchases
Sales revenue
Purchases returns and allowances
Sales returns and allowances
Instructions
At Cost
At Retail
$70,800
$ 98,500
15,000
53,000
219,500
294,000
345,000
4,300
5,500
10,000
Compute the ending inventory at cost as of January 31, 2020, using the retail method which
approximates lower of cost or market.