Homework Answers
Answer-A-1)- The cost ratio using the retail method = 56%.
Explanation- Cost to retail ratio = ($826000/$1475000)*100
= 56%
2)- Estimated cost of the Ending inventory using retail method =$275000*56%
= $154000
| Particulars | Cost | Retail | |
| $ | $ | ||
| Beginning Inventory | 148600 | 245200 | |
| Net Purchases | 677400 | 1229800 | |
| Total | 826000 | 1475000 | |
| Sales price of goods available | 1475000 | ||
| Less:-Net sales | 1200000 | ||
| Ending inventory at retail | 275000 |
B)- The estimated value of the destroyed inventory =$30000.
Explanation- Estimated value of the destroyed inventory= (Sales+ Gross profit)- (Opening inventory+ Purchases)
= {$140000+($140000*30%)}+ ($34000+$118000)
= ($140000+$42000)-$152000
= $30000
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