1. Determine the ending inventory under the conventional retail method for the furniture department of Tamarisk...

1. Determine the ending inventory under the conventional retail method for the furniture department of Tamarisk Department Stores from the following data.

	Cost		Retail
Inventory, Jan. 1		$152,400		$287,600
Purchases		1,426,400		2,070,000
Freight-in		70,900
Markups, net				95,900
Markdowns, net				46,500
Sales revenue				2,093,100

Ending inventory --> _______

Expert Solution

NOTE : In conventional retail method we exclude markdowns and include net markups for calculation of the cost/retail ratio.

solution : step ;1 Calculation of Cost and retail value of goods available

Particulars	Cost	Retail
inventory, Jan. 1	152,400	287,600
Purchases	1,426,400	2,070,000
Freight-in	70,900
Markups, net		95,900
Total cost	1649700	2453500

step ;2 Calculation of Cost to retail ratio+ Cost value/ retail value=1649700/2453500=.67236(approx)

step ;3 Calculation of inventory remained

Retail cost of goods as per step 1 2453500

less:Sales revenue 2093100?

inventory remained 360500

step ;4 Calculation of value of ending Inventory as per conventional retail method

value of ending Inventory as per conventional retail method

= inventory remained as per step 3 x cost/retail ratio.

360500 x.67236 = $ 242386

thus we can say that ,the ending inventory under the conventional retail method for the furniture department of Tamarisk Department Stores is $ 242386

ekkarill92 answered 1 year ago

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