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Retail Inventory Method The following data were available from Hegge Department Stores records for the year ended December 3Retail Inventory Method The following data were available from Hegge Department Stores records for the year ended December 3

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HEGGE DEPARTMENT STORE
Calculation of ending inventory by retail inventory method (Lower of cost of market)
For the year ended December 3, 2019
Cost Retail
Beginning inventory 90000 150000
Purchases 351000 470000
Markups 10000
441000 630000
Markdowns -50000
Sales -500000
Ending inventory at retail 80000
Ending inventory at LCM 56000

Cost to retail ratio = $441000/$630000 = 70%

Ending inventory at LCM = Cost to retail ratio x Ending inventory at retail = 70% X $80000 = $56000

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