BE 9-9 Fosbre Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales revenue for the same period was $700,000. Fosbre's normal gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbre's April 30 inventory that was destroyed by fire By using gross profit method, Beginning Inventory as of Jan 1 150,000 Add: Purchases from Jan to Apr 500,000 Goods Avaailable for Sale 650,000 Less: Cost of Goods Sold 455,000 Estimated inventory destroyed by fire as of Apr 30 195,000 BE 9-10 Boyne Inc. had beginning inventory of $12,000 at cost and $20,000 at retail. Net purchases were $120,000 at cost and $170,000 at retail. Net markups were $10,000, net markdowns were $7,000, and sales revenue was $147,000. Compute ending inventory at cost using the conventional retail method. Cost Retail Beginning inventory 12,000 20,000 Purchases (net) 120,000 170,000 Merchandise available for sale 132,000 190,000 Add: Markups (net) 10,000 200,000 Cost-to-Reail ratio = 132,000/200,000 = 66% Less: Markdowns (net) 7,000 193,000 Less: Sales (net) 147,000 Ending Inventory at retail 46,000 Ending Inventory at cost = 46,000 x 0.66 = 30,360 BE 9-11 In its 2015 annual report, Gap Inc. reported inventory of $1,889 million on January 31, 2015, and $1,928 million on February 1, 2014, cost of goods sold of $10,146 million for 2015, and net sales of $16,435 million. Compute Gap's inventory turnover and the average days to sell inventory for the fiscal year 2015. Average Inventory = (1,889M + 1,928M)/2 = 1908.5 Inventory turnover = 10,146M/1908.5 = 5.32 times Average days to sell inventory for the fiscal year 2015 = 365/5.32 = 68.7 days