Question

Use for 8-10 ROUND ALL PERCENTAGES TO TWO DECIMALS EX: 43.23% The following data concerning the retail inventory method are taken from the financial records of Blake Company. Cost Retail Beginning inventory $132,000 $ 220,000 Purchases 362,500 550,000 Freight-in 16,000 — Net markups — 45,000 Net markdowns — 16,000 Sales — 625,000 8. What is the ending inventory at retail? 9. If the ending inventory is to be valued at approximately the conventional retail inventory method, the calculation of the cost to retail ratio should be based on goods available for sale at: (a) cost(dollar amount) and (b) retail(dollar amount) 10. What is the cost of ending inventory using the FIFO cost method?

Answer 1

8)

	cost	Retail
Beginning inventory	132000	220000
purchase	362500	550000
Freight in	16000	0
markup		45000
cost of goods available for sale including markup	510500	815000
Markdown		(16000)
Less:sales		(625000)
Ending inventory at retail		174000

9)cost to retail ratio =cost /retail

                      = 510500/815000

                      = .6264 or 62.64%

10)cost of ending inventory using the FIFO cost method : inventory at retail * cost to retail ratio

                     = 174000 *.6264

                    = $ 108993.6 [rounded to 108,994]