Question

In: Accounting

Exercise 5-16B Estimating ending inventory-retail method LO P4 In 2017, Dakota Company had net sales (at...

Exercise 5-16B Estimating ending inventory-retail method LO P4

In 2017, Dakota Company had net sales (at retail) of $134,000.

At Cost At Retail
Beginning inventory $ 32,300 $ 64,600
Cost of goods purchased 64,106 98,800


The above additional information is available from its records at the end of 2017. Use the retail inventory method to estimate Dakota's 2017 ending inventory at cost. (Round cost ratio to the nearest whole percentage.)
  

At Cost Cost-to-Retail Ratio At Retail
Beginning inventory $32,300 $64,600
Cost of goods purchased 64,106 98,800
Cost of goods available for sale $96,406 $163,400
Net sales at retail
Ending inventory

Solutions

Expert Solution

Solution:

At Cost At Retail
Beginning inventory $32,300 $64,600
Cost of goods purchased $64,106 $98,800
Cost of goods available for sale $96,406 $163,400

Cost ratio = $96,406 / $163,400 * 100

= 59%

Sales at retail = $134,000

Estimated Inventory at retail = $163,400 - $134,000

= $29,400

Estimated Inventory at cost = $29,400 * 59%

= $17,346.


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