Compute the Ending Inventory at Retail

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Question - A company uses the RETAIL INVENTORY METHOD to compute its ending inventory on December 31, 2020. The data below was available. Unfortunately, the computer did not say whether the items are PLUS or MINUS amounts, so you decide based on what is reasonable.

AT COST AT RETAIL

Beginning Inventory 72,800 98,500

Markdowns 35,000

Markdown cancellations 20,000

Mark ups 73,000

Purchases 219,500 294,000

Purch Returns 4,300 5,500

Sales 345,000

Sales Returns 10,000

PART A: Using the Weighted Average with Lower of Cost or Market (also called the Conventional or Traditional Approach): What numbers go in the numerator and denominator to compute the Cost ratio?

PART B: Compute the Ending Inventory at Retail and then use your cost ratio from above to compute the estimated Ending Inventory at Cost.

Reference no: EM132752645

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