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In: Accounting
6. Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following...
6. Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year:
Cost Retail
Beginning inventory $ 60,000 $ 90,000
Purchases 380,000 520,000
Freight-in 5,000 —
Net markups — 17,000
Net markdowns — 20,000
Sales revenue — 410,000
What is the cost of ending inventory using the conventional method?
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Expert Solution
Answer to Question:
Calcuation of Cost of Ending Inventoryusing Conventional Method:
| Particulars | Cost($) | Retail($) |
| Beginning Inventory | 60,000.00 | 90,000.00 |
| Purchases | 380,000.00 | 520,000.00 |
| Freight in | 5,000.00 | |
| Net Markups | 17,000.00 | |
| Cost of Goods available for sale | 445,000.00 | 627,000.00 |
| Cost to Retail Ratio | 0.7097 | |
| [$4,45,000/$6,27,000] | ||
| Particulars | Cost($) | Retail($) |
| Cost of Goods available for sale | 445,000.00 | 627,000.00 |
| Less: Sales | (410,000.00) | |
| Less: Net Markdowns | (20,000.00) | |
| Ending Inventory | 197,000.00 | |
| x Cost to Retail Ratio | 0.7097 | |
| Cost of Ending Inventory under Conventional Method | 139,816.59 |
ekkarill92 answered 2 years agoRelated Solutions
Crane Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements....
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