Question

LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March 2021:

		Cost		Retail
Beginning inventory	$	47,000	$	67,000
Purchases		214,000		407,000
Freight-in		19,680
Purchase returns		7,500		9,500
Net markups				6,500
Net markdowns				4,200
Normal breakage				9,500
Net sales				287,000
Employee discounts				2,500

Sales are recorded net of employee discounts.

Answer 1

					Cost	Retail
	Beginning inventory				$   47,000.00	$    67,000.00
Add:	Purchases				$ 214,000.00	$ 407,000.00
Add:	Freight In				$   19,680.00
Less:	Purchase returns				$    (7,500.00)	$     (9,500.00)
Add:	Net mark ups					$      6,500.00
	Total					$ 471,000.00
Less:	Net mark downs					$     (4,200.00)
	Goods available for sale				$ 273,180.00	$ 466,800.00
Less:	Normal breakage					$     (9,500.00)
	Sales
	Net sales					$(287,000.00)
	Employee discount					$     (2,500.00)
	Estimated ending inventory at retail					$ 167,800.00
	Estimated ending inventory at cost					$   (97,324.00)	($ 167800 x 58%)
	Estimated cost of goods sold					$ 175,856.00	($ 273180 - $ 97324)
	Cost to retail %		$ 273180 / $ 471000		58%