Question

Swifty Inc. had beginning inventory of $11,000 at cost and $19,800 at retail. Net purchases were $122,300 at cost and $184,200 at retail. Net markups were $11,000, net markdowns were $7,000, and sales revenue was $140,100. Compute ending inventory at cost using the conventional retail 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 the conventional retail method

Answer 1

Computation of the ending inventory at cost
by the conventional retail inventory method.
	Cost ($)	Retail ($)
Beginning Inventory	11,000.00	19,800.00
Net Purchases	122,300.00	184,200.00
Totals	133,300.00	204,000.00
Add: Net markups	-	11,000.00
	133,300.00	215,000.00
Deduct: Net markdowns	-	7,000.00
Sales price of goods available	133,300.00	208,000.00
Deduct: Net sales	-	140,100.00
Ending inventory	133,300.00	67,900.00
Cost-to-retail ratio = 133,300 / 215,000 = 62%
Ending inventory at cost = 67,900 * 62% = $42,098