Question

Determine the ending inventory under the conventional retail method for the furniture department of Bonita Department Stores from the following data. (Round ratio of cost to selling price to 2 decimal places, e.g. 15.25% and final answer to 0 decimal places, e.g. 5,125.)

		Cost		Retail
Inventory, Jan. 1		$154,200		$291,700
Purchases		1,361,600		2,249,100
Freight-in		69,200
Markups, net				92,000
Markdowns, net				48,600
Sales revenue				2,251,400

Ending inventory

$

Answer 1

Computation of the ending inventory at cost
by the conventional retail inventory method.
	Cost ($)	Retail ($)
Beginning Inventory	154,200.00	291,700.00
Net Purchases	1,361,600.00	2,249,100.00
Freight	69,200.00	-
Totals	1,585,000.00	2,540,800.00
Add: Net markups	-	92,000.00
	1,585,000.00	2,632,800.00
Deduct: Net markdowns	-	48,600.00
Sales price of goods available	1,585,000.00	2,584,200.00
Deduct: Net sales	-	2,251,400.00
Ending inventory	1,585,000.00	332,800.00
Cost-to-retail ratio = 1,585,000 / 2,632,800 = 60.20%
Ending inventory at cost =332,800 * 60.20% = $200,352