Question

Inventory, May 1: at retail $64,000; at cost $98,000Purchases in May: at retail $71,000; at cost $105,600Freight-in: $3,000Purchase returns: at retail $3,000; at cost $2,500Transfers out to a nearby branch: at retail $9,000; at cost $7,600Net markups: $6,000Net markdowns: $3,500Inventory losses due to normal breakage, etc.: at retail $850Sales at retail: $110,000Sales returns: $3,600Instructions(a) Compute the inventory for this department as of May 31,

Answer 1

Computation of Ending Inventory as of May 31 :
	Cost	Retail
Beginning Inventory	$       98,000	$       64,000
Purchases	$   1,05,600	$       71,000
Freight In	$         3,000	$                -
Purchase returns	$        -2,500	$        -3,000
Transfer out to a nearby branch	$        -7,600	$        -9,000
Total	$   1,96,500	$   1,23,000
Net Markups	0	$         6,000
	$   1,96,500	$   1,29,000
Net Markdowns		$        -3,500
Loss from breakage		$           -850
Sales		$ -1,10,000
Sales Return		$         3,600
Ending Inventory at retail		$       18,250
Cost to retail ratio	=	$196500 / $129000
		152%
Ending Inventory at cost	=	Ending Inventory at retail X 52%
	=	$18,250 X 152%
	=	$       27,799