Question
In: Accounting
The following information is available for the past month for a retail store: Sales $87,000 Markups...
The following information is available for the past month for a
retail store:
| Sales | $87,000 |
| Markups | $9,000 |
| Markdowns | $9,000 |
| Purchases (at cost) | $38,800 |
| Purchases (at retail) | $107,000 |
| Beginning inventory (at cost) | $30,000 |
| Beginning inventory (at retail) | $48,186 |
What is the ending inventory at cost using the conventional retail
method?
|
$38,870 |
||
|
$164,186 |
||
|
$78,000 |
||
|
$28,570 |
Solutions
Expert Solution
Answer: $28,570
Explanation
| Computation of the ending inventory at cost | |||
| by the conventional retail inventory method. | |||
| Cost ($) | Retail ($) | ||
| Beginning Inventory | 30,000.00 | 48,186.00 | |
| Net Purchases | 38,800.00 | 107,000.00 | |
| Totals | 68,800.00 | 155,186.00 | |
| Add: Net markups | - | 9,000.00 | |
| 68,800.00 | 164,186.00 | ||
| Deduct: Net markdowns | - | 9,000.00 | |
| Sales price of goods available | 68,800.00 | 155,186.00 | |
| Deduct: Net sales | - | 87,000.00 | |
| Ending inventory | 68,800.00 | 68,186.00 | |
| Cost-to-retail ratio =68,800 / 164,186 = 41.90% | |||
| Ending inventory at cost =68,186 * 41.90% = $28.570 |
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