Homework Answers
| Estimated Inventory | Cost | Retail |
| Beginning inventory, January 1 | $45000 | $58800 |
| Purchases, January 1- March 18 | 125000 | 165250 |
| Freight in | 4650 | - |
| Total merchandise available for sale | $174650 | $224050 |
| Less: Sales | 180000 | |
| Ending inventory at retail | $44050 | |
| Ending inventory, March 18, at cost | $34336.98 | |
From the information we can say that the company may use retail inventory method for the purpose of calculating the ending inventory on March 18 at cost
Cost ratio= $174650*100/224050= 77.95%
Ending inventory, March 18, at cost= Ending inventory at retail*Cost ratio
= $44050*77.95%= $34336.98
Cost of goods sold= Total merchandise available for sale-Ending inventory, March 18, at cost
= $174650-34336.98= $140313.02
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