Question

In: Accounting

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

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

Sales revenue $106,300 Purchases (at cost) $51,500
Sales returns 2,100 Purchases (at sales price) 88,500
Markups 10,100 Purchase returns (at cost) 2,100
Markup cancellations 1,700 Purchase returns (at sales price) 3,000
Markdowns 9,800 Beginning inventory (at cost) 17,564
Markdown cancellations 2,900 Beginning inventory (at sales price) 42,500
Freight on purchases 2,600


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.)

Solutions

Expert Solution

Ans :

Cost Retail
Beginning inventory 17564 42500
Purchases 51500 88500
Purchase returns -2100 -3000
Freight on purchases 2600
Totals 69564 128000
Add: Net markups
Markups 0 10100
Markups Cancellations 0 0 -1700 8400
69564 136400
Deduct : net markups
Markdowns 0 9800
Markdown cancellation 0 -2900
Net markdowns 0 6900
Sales price of goods available 129500
Deduct: Net sales (106300-2100) 104200
Ending inventory at retail 25300

Cost to retail = 69,564 / 136,400

= 51%

Ending inventory at retail = $ 25,300

Ending inventory at cost = $ 25,300 * cost to retail ratio

= $ 25,300 * 51 %

= $ 12,903.


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