Reference no: EM132703924

Questions -

Q1. Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating to the computation of the inventory at July 31, 2020, are as follows:

Cost Retail

Inventory, 2/1/20P 200,000P 250,000

Purchases 1,000,000 1,575,000

Markups, net 175,000

Sales 1,750,000

Estimated normal shoplifting losses 20,000

Markdowns, net 110,000

1. Under the lower-of-cost-or-net realizable value method, Henke's estimated inventory at July 31, 2020 is

P 72,000.

P 84,000.

P 96,000.

P 120,000.

Q2. Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year:

Cost Retail

Beginning inventory P 30,000P 50,000

Purchases 145,000 200,000

Freight-in 2,500-

Net markups- 8,500

Net markdowns- 10,000

Employee discounts-1,000

Sales- 205,000

1. If the ending inventory is to be valued at the lower-of-cost-or-net realizable value, what is the cost to retail ratio?

P 177,500 ÷ P 250,000

P 177,500 ÷ P 258,500

P 175,000 ÷ P 260,000

P 177,500 ÷ P 248,500