Question

The records of Ellen's Boutique report the following data for the month of April.

Sales Revenue 95600

Sales Returns 1800

Markups 9500

Markup Cancellations 1400

Markdowns 8600

Markdown Cancellations 2700

Freight on purchases 2100

Purchases (@ Cost) 47200

Purchases (@ sales price) 85800

Purchase Returns (@ cost) 1800

Purchase Returns (@ sales) 2800

Beg Inventory @ cost 36103

Beg. Inventory @ sales 50600

Compute the ending inventory by the conventional retail inventory method

Answer 1

Purchases (@Cost)	$47,200
Less: Purchase Returns (@Cost)	($1,800)
Add: Freight on Purchases	$2,100
Effective Purchases (@Cost)	$47,500
Add: Beginning Inventory (@Cost)	$36,103
Total Inventory (@Cost)	$83,603
Purchases (@Sales Price)	$85,800
Less: Purchase Returns (@Sales Price)	($1,800)
Add: Markups	$9,500
Less: Markup Cancellations	($1,400)
Add: Beginning Inventory (@Sales Price)	$50,600
Total Inventory (@Sales Price)	$142,700
Total Inventory (@Cost) (a)	$83,603
Total Inventory (@Sales Price) (b)	$142,700
Cost to Retail Ratio (a / b)	0.59 or 59%
Sales	$95,600
Less: Sales Returns	($1,800)
Add: Markdowns	$8,600
Less: Markdown Cancellations	($2,700)
Effective Sales	$99,700
Total Inventory (@Sales Price)	$142,700
Less: Effective Sales	($99,700)
Ending Inventory (@Retail Price)	$43,000
Ending Inventory (@Cost) ($43,000*59/100)	$25,370

Therefore, the ending inventory by the conventional retail inventory method is $25,370.