Question

	Cost	Retail
Inventory	247,100	390,000
Purchases	930,823	1,484,000
Purchase returns	59,000	78,500
Purchase Discounts	18,400
Gross sales revenue		1,410,500
Sales returns		98,700
Markups		118,400
Markup cancellation		39,600
Markdowns		45,300
Markdown cancellation		20,000
Freight in	42,800
Employee discount granted		7,900
Loss from breakage (normal)		5,000

Assuming that Marin Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2021. (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

Particulars	Cost		Retail
Beginning inventory	$ 247,100		$ 390,000
Add: Purchases	$ 930,823		$ 1,484,000
Add: Freight-in	$ 42,800		$ 0
Less: Purchase returns	($ 59,000)		($ 78,500)
Less: Purchase discounts	($ 18,400)		$ 0
Total	$ 1,143,323		$ 1,795,500
Add: Net Markups
Markups		$ 118,400
Less: Markup cancellation		($ 39,600)	$ 78,800
Total	$1,143,323		$1,874,300
Cost to retail ratio     = $ 1,143,323 / $ 1,874,300     =    61%
Less: Net Markdowns
Markdowns		$ 45,300
Less: Markdown cancellations		( $20,000 )	($ 25,300 )
Total			$ 1,849,000
Less: Normal Loss			($ 5,000)
Less: Employee discounts			($ 7,900)
Goods available for sale			$ 1,836,100
Less: Net Sales
Sales		$1,410,500
Less: Sales returns		( $ 98,700 )	( $1,311,800)
Ending Inventory at Retail			$ 524,300
Cost of Ending Inventory using the the conventional retail inventory method    Cost to retail ratio x Ending Inventory at Retail                = 61% x $ 524,300          =    $ 319,823