Question

Required information LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March 2021: Cost Retail Beginning inventory $ 48,000 $ 68,000 Purchases 215,000 408,000 Freight-in 26,194 Purchase returns 8,000 6,000 Net markups 6,600 Net markdowns 4,300 Normal breakage 6,000 Net sales 288,000 Employee discounts 2,600 Sales are recorded net of employee discount

Answer 1

Answer-The ending inventory using the conventional retail method is =$106200.

Explanation-

Cost to retail ratio = ($281194/$476600)*100

= 59%

Ending inventory using the conventional retail method =$180000*59%

=$106200

Particulars	Cost		Retail
	$	$	$
Beginning Inventory	48000		68000
Purchases	215000		408000
Purchase returns	-8000		-6000
Freight on purchases	26194
Total	281194		470000
Add:- Net markups:			6600
	281194		476600
Less:-Net markdowns:
Less- Normal spoilage & breakage			6000
Sales price of goods available			470600
Less:-Net sales			288000
Less- Employee Discounts			2600
Ending inventory at retail			180000