Question

Almaden Valley Variety Store uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for 2018 are as follows:

	Cost			Retail
Beginning inventory	$	19,000		$	27,000
Purchases		109,600			172,000
Freight-in		7,600
Purchase returns		7,500			10,500
Net markups					9,500
Net markdowns					6,500
Normal spoilage					4,900
Net sales					159,000

Required:
Complete the table below to estimate the ending inventory and cost of goods sold for 2018, applying the conventional retail method

	Cost Retail Cost-to-Retail Ratio Beginning inventory Plus: Purchases Freight-in Less: Purchase returns Plus: Net markups 0 Less: Net markdowns Goods available for sale 0 0 Cost-to-retail percentage Less: Normal spoilage Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Answer 1

If it is helpful, please rate the answer and if any doubt arises let me know

		Cost	Retail	Cost - to Retail Ratio
	Beginning Inventory	$       19,000	$       27,000
	Purchases	$   1,09,600	$   1,72,000
	Freight In	$         7,600	$                -
	Purchase returns	$        -7,500	$     -10,500
	Net Markups		$         9,500
		$   1,28,700	$   1,98,000
	Net Markdowns		$        -6,500
	Goods available for sale	$   1,28,700	$   1,91,500
	Cost - to Retail Percentage			67.21%
	Normal Spoilage		$        -4,900
	Net Sales		$ -1,59,000
	Estimated Ending Inventory at retail		$       27,600
	Estimated Ending Inventory at cost	$       18,550
	Estimated cost of goods sold	$   1,10,150
	Cost to retail percentage	=	Cost / Retail
		=	$128700/$191500
		=	67.21%
	Estimated Ending Inventory at cost	=	$27600 X 67.21%
		=	$       18,550
	Estimated Cost of goods sold	=	$128700 - $18550
		=	$   1,10,150