Question

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.)

Answer 1

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.