Answer-
Cost | Retail | |
Beginning inventory | $36 | $60 |
Add: Purchases | 638 | 956 |
Freight in | 28 | |
Net markups | 4 | |
Less: Purchase returns | -1 | -2 |
Net markdowns | -8 | |
Goods available for sale (excluding beginning inventory) | $665 | $950 |
Base layer cost-to-retail %: 36/60 = 60%
2018 layer cost-to-retail %: 665/950 = 70%
Step 2.
Cost | Retail | |
Goods available for sale (excluding beginning inventory) | $665 | $950 |
Add: beginning inventory | 36 | 60 |
Goods available for sale (including beginning inventory) | $701 | $1010 |
Less: Net sales | (850) | |
Estimated ending inventory at current year retail prices | $160 |
Step 3.
Estimated ending inventory at cost = ($60 x 1.00 x 60%) + [{($160/1.70) - $60} x 1.70 x 70%]
= 36 + 40
= $76
Cost of goods available for sale (including beginning inventory) | $701 |
Less estimated ending inventory at cost | -76 |
Estimated cost of goods sold | $625 |
($ in 000s) | |
Estimated ending inventory at retail | $160 |
Estimated ending inventory at cost | $76 |
Estimated cost of goods sold | $625 |
Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2021, the...
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