Determine the estimated cost of the ending inventory

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Reference no: EM131790069

Problem - Neer Department Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available for two of its departments at August 31, 2008.


Sporting Goods

Jewelry and Cosmetics


Cost

Retail

Cost

Retail

Net sales


$1,052,900


$1,153,000

Purchases

$729,600

1,128,200

$732,500

1,158,400

Purchase returns

(26,000)

(41,080)

(11,820)

(19,670)

Purchase discounts

(12,530)

-

(2,730)

-

Freight-in

8,430

-

13,540

-

Beginning inventory

45,090

72,920

39,340

62,990

At December 31, Neer Department Store takes a physical inventory at retail. The actual retail values of the inventories in each department are Sporting Goods $94,550, and Jewelry and Cosmetics $43,370.

Determine the estimated cost of the ending inventory for each department on August 31, 2008, using the retail inventory method.

Compute the ending inventory at cost for each department at December 31, assuming the cost-to-retail ratios are 58% for Sporting Goods and 64% for Jewelry and Cosmetics.

Sporting goods inventory

Jewelry & Cosmetics inventory

Reference no: EM131790069

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