Question

In: Accounting

The records of Kingbird’s Boutique report the following data for the month of April. Sales revenue...

The records of Kingbird’s Boutique report the following data for the month of April.

Sales revenue $95,600 Purchases (at cost) $47,200
Sales returns 1,800 Purchases (at sales price) 85,800
Markups 9,500 Purchase returns (at cost) 1,800
Markup cancellations 1,400 Purchase returns (at sales price) 2,800
Markdowns 8,600 Beginning inventory (at cost) 36,103
Markdown cancellations 2,700 Beginning inventory (at sales price) 50,600
Freight on purchases 2,100


Compute the ending inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using conventional retail inventory method $

_____________________

Please provide explanation

Solutions

Expert Solution

The Ending inventory using conventional retail inventory method

Particulars

At Cost ($)

At Retail ($)

Beginning Inventory

36,103

50,600

Purchases

47,200

85,800

(-) Purchase Returns

-1,800

-2,800

(+) Freight on purchase

2,100

-  

Total

83,603

1,33,600

Add: Net Mark-up

Mark-up

9,500

(-)Mark-up cancellations

-1,400

8,100

Sub-total

83,603

1,41,700

Deduct: Net Markdowns

Markdowns

8,600

(-) Markdown cancellations

-2,700

Net Markdowns

5,900

Sale value of goods available for sale

1,35,800

(-) Net Sales [$108,600 - $1,900]

93,800

Value of Ending Inventory, At retail

42,000

Cost-to-retail Ratio

59.00%

[$83,603 / $141,700] x 100

The Ending inventory using conventional retail inventory method

Therefore, the Ending inventory using conventional retail inventory method will be $24,780

[$42,000 x 59.00%]

“Hence, the Ending inventory using conventional retail inventory method will be $24,780”


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