Question

Presented below is information related to Luzon SA. Cost Retail Beginning inventory R$ 58,000 R$100,000 - Purchases (net) 122,000 200,000- Net markups 20,000 Net markdowns 30,000 Good available for sale 180,000 290,000- Sales 186,000- Ending inventory 104,000- Instructions a. Compute the ending inventory at retail.. b. Compute a cost-to-retail percentage (round to two decimals) under the following conditions. 1. Excluding both markups and markdowns. 2. Excluding markups but including markdowns. 3. Excluding markdowns but including markups. 4. Including both markdowns and markups. C. Compute ending inventory at cost(round to nearest dollar)- 1. Excluding both markups and markdowns. 2. Excluding markups but including markdowns. 3. Excluding markdowns but including markups. 4. Including both markdowns and markups.

Answer 1

	Cost	Retail
Beginning inventory	58,000	100,000
Net purchases	122,000	200,000
Markups		20,000
Less Net markdowns		(30,000)
Goods available for sale	180,000	290,000
Less: sales		(186,000)
Ending inventory at retail		104,000

A. Ending inventory at retail= $104,000

B. Cost to retail percentage

1. Excluding both markups and markdowns = 180,000÷300,000= 60% or 0.6

2. Excluding markups but including markdowns= 180,000÷270,000=66.67% or 0.66

3. Excluding markdowns but including markups= 180,000÷320,000= 56.25% or 0.56

4. Including both markdowns and markups = 180,000÷290,000= 62.06% or 0.62

C. Calculation of ending inventory at cost

1. Excluding both markups and markdowns=300,000-186,000=114,000×60% = $68,400.

2. Excluding markups but including markdowns=270,000-186,000= 84,000×66.67%= $56,000.

3. Excluding markdowns but including markups = 320,000- 186,000=134,000×56.25% = $75,375.

4. Including both markdowns and markups= 290,000-186,000= 104,000×62.06%= $64,542.

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