Question

Jones Co. uses the retail inventory method. Given the following data, what's the ending inventory at cost? Round cost ratio to the nearest whole percent.

Sales at retail: $80,000
Net purchases at cost: $41,200
Net purchases at retail: $66,800
Beginning inventory at cost: $22,400
Beginning inventory at retail: $36,800

Answer 1

Calculation of the ending inventory of cost to the nearest cent under the retail method: Retail (S) Cost (S) Particulars Beginning inventory Add: Net purchases 36,800 66,800 22,400 41,200 Cost of goods available for sale Less: Net sales at retail 63,600 103,600 (80,000) (80,000) Ending inventory at retail Cost ratio Ending inventory at cost 16,400 23,600 61% 14,396 Working Notes: Calculation of cost ratio: Amount (S) Particulars Cost of goods available for sale (a) ($22,400 $41,200) Retail value of goods available (b) ($36,800 $66,800) Cost ratio (Rounded to whole percent) 63,600 103,600 61% Hence, the ending inventory at cost is $14,396