Question

Exercise 9-21 Presented below is information related to Waterway Company. Cost Retail Beginning inventory Purchases Markups Markup cancellations Markdowns Markdown cancellations Sales revenue $374,710 $283,000 1,393,000 2,165,000 93,800 16,500 37,300 4,500 2,181,000 Compute the inventory by the conventional retail inventory method. (Round ratios for computational purpose Ending inventory using conventional retail inventory method

Answer 1

Ans-

	Cost	Retail
Beginning Inventory	$374,710	$283,000
Purchases	1,393,000	2,165,000
Markups		93,800
Markups cancellation		(16,500)
Inventory after markups	1,767,710	2,525,300
Markdowns		(37,300)
Markdowns cancellation		4,500
Retail after markdown		2,492,500
Sales		2,181,000
Inventory at retail		311,500
	1,767,710

Cost to retail ratio= Total cost as per cost/ Total cost as per retail

=1,767,710/ 2,525,300

=70%

Ending Inventory at cost= Ending inventory at retail * Cost to retail ratio

= $311,500*70%

=$218,050

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