Question

In: Accounting

1. Harden Company had goods available for sale at cost amounting to $130,000 and at retail...

1. Harden Company had goods available for sale at cost amounting to $130,000 and at retail amounting to $200,000. The net sales for the current period amounted to $150,000. What is the estimated value of the ending inventory at cost using the retail method? Show your work.

Solutions

Expert Solution

Cost to retails ratio = Cost value of goods Available for Sale / Retail value of good available for sale

                                       = $ 130,000 / $ 200,000

                                       = 0.65

Ending Inventory Calculation

Particulars At Cost Price At Retail Value
Goods Available for Sale $ 130,000 $ 200,000
Less: Net Sales $ 150,000
Ending Inventory at retail value $ 50,000
Cost to retail ratio 0.65
Ending Inventory
(Ending Inventory at retail value * Cost to retail ratio)		 ($50,000 * 0.65) = $32,500

Hence, Estimated value of the ending inventory at cost using the retail method is $ 32,500.

ekkarill92 answered 2 years ago
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