Question

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

Answer 1

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”