Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2021:
Cost | Retail | |||||
Merchandise inventory, January 1, 2021 | $ | 390,000 | $ | 320,000 | ||
Purchases | 587,000 | 980,000 | ||||
Freight-in | 28,000 | |||||
Net markups | 40,000 | |||||
Net markdowns | 6,000 | |||||
Net sales | 1,000,000 | |||||
Required:
Determine the December 31, 2021, inventory by applying the conventional retail method using the information provided.
Answer- Estimated ending inventory at cost = $250500
Estimated ending inventory at retail = $334000
Explanation-Cost to retail ratio = ($1005000/$1340000)*100
= 75%
Estimated ending inventory at cost =$334000*75%
=$250500
Particulars | Cost | Retail | |
$ | $ | $ | |
Beginning Inventory | 390000 | 320000 | |
Purchases | 587000 | 980000 | |
Freight-in | 28000 | ||
Total | 1005000 | 1300000 | |
Add:- Net markups: | 40000 | ||
1005000 | 1340000 | ||
Less:-Net markdowns: | 6000 | ||
Sales price of goods available | 1334000 | ||
Less:-Net sales | 1000000 | ||
Ending inventory at retail | 334000 |
Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2021:
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