Question

In: Accounting

Presented below is information related to Marin, Inc. Cost Retail Beginning inventory $331,500 $585,000 Purchases 1,482,000...



Presented below is information related to Marin, Inc.

Cost

Retail

Beginning inventory $331,500 $585,000
Purchases 1,482,000 2,613,000
Freight on purchases 63,180
Markups 136,500
Markup cancellations 109,200
Abnormal shortage 11,700 20,280
Markdowns 68,640
Markdown cancellations 9,360
Employee discounts 4,056
Sales revenue 2,788,500
Sales returns 78,000
Normal shortage 13,650
Purchase returns 17,160 31,980


Compute ending inventory by the conventional retail inventory method. (Round percentages for computational purposes to 1 decimal place, e.g. 0.4158 to 41.6% and final answer to 0 decimal places, e.g. 5,275.)

Ending inventory

Solutions

Expert Solution

Answer -

Computation of ending inventory by the conventional retail inventory method

Explanation Cost ($) Retail ($)
Beginning inventory Given in question 331500 585000
Add- Purchases Given in question 1482000 2613000
Add- Freight on purchases Given in question 63180 -
Less- Purchase returns Given in question (17160) (31980)
Add- Net markups $136500 - $109200 - 27300
Less- Abnormal shortage Given in question (11700) (20280)
Total - 1847820 3173040
Cost to Retail percentage (%) = 58.2% ($1847820 / $3173040) * 100 - -
Less- Net markdowns $68640 - $9360 - (59280)
Goods available for sale - 1847820 3113760
Less- Normal shortage Given in question - (13650)
Less- Net sales $2788500 - $78000 - (2710500)
Less- Employee discounts Given in question - (4056)
Estimated ending inventory at Retail $3113760 - $13650 - $2710500 - $4056 - 385554
Estimated ending inventory at Cost $385554 * 58.2% 224392 -

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