Best Buy purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Best Buy ends each feb 28. The Nashville store began fiscal year 20X5 with an inventory of 20,000 units that cost a total of $1,000,000. During the year, the store purchased merchandise on account as follows:
April (30,000 units @ cost of $60)........................ $ 1,800,000
August (50,000 units @ cost of $64)..................... 3,200,000
November (60,000 units @ cost of $70)................ 4,200,000
Total purchases . . . . . . . . . . . . .. . . . . . . . . . . . 9,200,000
Cash payments on account totalled $8,800,000. During fiscal year 20X5, the store sold 150,000 units of merchandise for $14,400,000, of which $5,000,000 was for cash and the balance was on account. Best Buy uses the average cost method for inventories. Operating expenses for the year were $4,000,000. The store paid 80% in cash and accrued the rest as accrued liabilit
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