Question

Grand Department Store, Inc., uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2018 3 Inventory, october 1, 2018: s 11,00e 21,000 At cost At retail Purchases (exclusive of freight and returns): 5 points At cost At retail Freight-in Purchase returns: 96,284 137,500 4,200 1,200 1,900 1,600 200 710 3,600 126,730 At cost At retail Additional markups Markup cancellations Markdowns (net) Normal spoilage and breakage Sales eBook Required 1. Using the conventional retail method, prepare a schedule computing estimated lower of cost or market (LCM) inventory for October 31, 2018 (Round your cost-to-retail percentage to 2 decimal places (i.e., 0.1234 should be entered as 12.34) and round your final answers to the nearest whole dollar.) Cost Retail Beginning inventory Cost-to-retail percentage Goods available for sale Estimated ending inventory at retail Estimated ending inventory at cost

Answer 1

Answer-

Particulars	Cost		Retail
	$	$	$
Beginning Inventory	11000		21000
Purchases	96284		137500
Purchase returns	-1200		-1900
Freight-in	4200
Total	110284		156600
Add:- Net markups:			1400
Markups		1600
Markup cancellations		-200
	110284		158000
Cost to retail percentage				69.80%
Less:-Net markdowns:			710
Less:-Normal Spoilage			3600
Sales price of goods available			153690
Less:-Net sales			126730
Ending inventory at retail			26960

Estimated ending inventory at retail= $26960

Estimated ending inventory at cost= $26960*69.80% = $18818

Cost to retail percentage = ($110284/$158000)*100

= 69.%