Question

Presented below is information related to Company A

		Cost		Retail
Inventory, 12/31/17		$254,100		$386,700
Purchases		863,627		1,450,300
Purchase returns		59,400		79,600
Purchase discounts		17,900		—
Gross sales revenue		—		1,413,700
Sales returns		—		99,400
Markups		—		118,700
Markup cancellations		—		40,800
Markdowns		—		44,900
Markdown cancellations		—		20,400
Freight-in		42,400		—
Employee discounts granted		—		8,000
Loss from breakage (normal)		—		4,400

Assuming that Company A uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2018. (Round ratios for computational purposes to 0 decimal places, e.g 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using the conventional retail inventory method

$

Answer 1

Answer-The ending inventory using the conventional retail method is =$285619.

Explanation-

Cost to retail ratio = ($1082827/$1835300)*100

= 59%

Ending inventory using the conventional retail method =$484100*59%

=$285619

Particulars	Cost		Retail
	$	$	$
Beginning Inventory	254100		386700
Purchases	863627		1450300
Purchase returns	-59400		-79600
Purchase discounts	-17900
Freight-in	42400
Total	1082827		1757400
Add:- Net markups:			77900
Markups		118700
Markup cancellations		-40800
	1082827		1835300
Less:-Net markdowns:			24500
Markdowns		44900
Markdown cancellations		-20400
Less:-Loss from breakage (normal)			4400
Sales price of goods available			1806400
Less:-Net sales		($1413700-99400)	1314300
Less- Employee discounts			8000
Ending inventory at retail			484100