Question

Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2018: Cost $ 280,000 687,000 17,000 Retail $289,000 912,000 Merchandise inventory, January 1, 2018 Purchases Freight-in Net markups Net markdowns Net sales 29,000 4,900 890,000 Required: Determine the December 31, 2018, inventory by applying the conventional retail method. Cost Retail Cost-to-Retail Ratio Beginning inventory Plus: Purchases Freight-in Net markups Less: Net markdowns Goods available for sale 0 0 Cost-to-retail percentage Less: Net sales Estimated ending inventory at retail Estimated ending inventory at costſ

Answer 1

Cost Cost to retail ratio Retail 280,000.00 289,000.00 687,000.00 912,000.00 17,000.00 $ $ $1,230,000.00 $ 984,000.00 1,225,100.00 Beginning Inventory Plus : purchases Frieght in Net markups $ 29,000.00 Less : markdowns 4,900.00 Goods available for sale Cost to retail percentage 80% $890,000.00 $ 335,100.00 less : net sales Estimated ending inventory at retail Estimated ending inventory at cost $ 268,080.00 Note Cost to retail percentage Estimated ending inventory at cost 80% 984000/1230000 335100*80% 268080