Question

he records of Teal’s Boutique report the following data for the month of April.

Sales revenue		$89,500		Purchases (at cost)		$49,400
Sales returns		1,900		Purchases (at sales price)		95,900
Markups		10,500		Purchase returns (at cost)		1,900
Markup cancellations		1,600		Purchase returns (at sales price)		2,900
Markdowns		8,700		Beginning inventory (at cost)		28,799
Markdown cancellations		2,700		Beginning inventory (at sales price)		46,400
Freight on purchases		2,300

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.)

Ending inventory using conventional retail inventory method

$

Answer 1

Answer
The ending inventory by the conventional retail inventory method :
Accounts and details	Cost		Retail
Beginning inventory	$     28,799		$       46,400
Purchases	$     49,400		$       95,900
Freight on purchases	$       2,300
Less: Purchase returns	-$       1,900		-$         2,900
Total	$     78,599		$     139,400
Add: Net markups
Mark ups		$     10,500
Cancellation of mark ups		-$       1,600	$         8,900
	$     78,599		$     148,300
Less:  Net Mark downs
Mark downs		$       8,700
Cancellation of mark downs		-$       2,700	-$         6,000
Sales price of goods available			$     142,300
Less: Net sales ($89500 - $1,900)			-$       87,600
Ending inventory at retail			$       54,700
Cost to retail ratio :
$78599 / $148300 *100
53%
Ending inventory at cost = 53% * $54700 = $28991
Ending inventory at retail	$    54,700
Ending inventory at cost	$    28,991