Calculate Uncle Butch's' ending inventory using the retail inventory method under the FIFO cost flow assumption. Round the cost-to-retail ratio to 3 decimal places.

Retail Inventory Method

Uncle Butch's Hunting Supply Shop reports the following information related to inventory:

Beginning inventory Cost- $ 35,000 Retail- $ 92,000

Purchases Cost- 75,000 Reatil- 200,000

Net additional markups Cost- 0 Retail- 15,000

Net markdowns Cost- 0 Retail- (22,000)

Goods available for sale Cost- $110,000 Retail- $ 285,000

Sales (178,000)

Ending inventory at retail $ 107,000

Calculate Uncle Butch's' ending inventory using the retail inventory method under the FIFO cost flow assumption. Round the cost-to-retail ratio to 3 decimal places.

Solutions

Expert Solution

Retail Inventory method - FIFO
Particulars	Cost	Retail
Purchases	$75,000.00	$200,000.00
Net additional markups		$15,000.00
Net markdowns		-$22,000.00

Total (A)	$75,000.00	$193,000.00

Cost to retail ratio for Purchases (75000/193000)	0.389

Beginning Inventory (B)	$35,000.00	$92,000.00

Goods Available for Sale (A+B)	$110,000.00	$285,000.00
Less: Sales		$178,000.00
Ending inventory at retail		$107,000.00
Ending inventory at FIFO Cost ($107,000*0.389)	$41,623.00
Cost of goods sold ($110,000 - $41,623)	$68,377.00

ekkarill92 answered 1 year ago

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