The weighted average cost of capital for a wholesaler

Shelly Corporation
is an importer and wholesaler. Its merchandise is purchased from several suppliers and is warehoused by Shelly until sold to consumers. In conducting her audit for the year ended June 30, 2019, the corporation’s CPA determined that the system of internal control was good. Accordingly, she observed the physical inventory at an interim date, May 31, 2019, instead of at year-end.
The CPA obtained the following information from the general ledger:
Inventory, July 1, 2018 $ ...............................................................................................................87,500
Physical inventory, May 31, 2019 ................................................................................................95,000
Sales for 11 months ended May 31, 2019 ..................................................................................840,000
Sales for year ended June 30, 2019 .............................................................................................960,000
Purchases for 11 months ended May 31, 2019 (before audit ..................................................675,000
Purchases for year ended June 30, 2019 (before audit adjustments) .....................................800,000
The CPA’s audit disclosed the following information:
Shipments received in May and included in the...........................................................................$7,500

physical inventory but recorded as June purchases
Shipments received in unsalable condition and excluded from physical inventory;
credit memos had not been received nor had chargebacks to vendors been recorded:
Total at May 31, 2019 ..................................................................................................................1,000
Total at June 30, 2019 (including the May unrecorded chargebacks) ...................................1,500
Deposit made with vendor and charged to purchases in April 2019.

Product was shipped in July 2019. ...........................................................................................2,000
Deposit made with vendor and charged to purchases in May 2019. Product was shipped, FOB shipping point, on May 28, 2019, and was included in May 31, 2019, physical inventory as goods in transit. 5,500
Through the carelessness of the receiving department, a June shipment was damaged
by rain. This shipment was later sold in June at its cost of $10,000.