Steps used in retail inventory method, Accounting Basics

Assignment Help:

Q. Steps used in retail inventory method?

The retail inventory method approximation the cost of the ending inventory by applying a cost/retail price ratio to ending inventory stated at retail prices. The benefit of this method is that companies can estimate ending inventory (at cost) without taking a physical inventory. Therefore the use of this estimate permits the preparation of interim financial statements monthly or quarterly with no taking a physical inventory. The key elements for finding the ending inventory by the retail inventory method are

- Total the beginning inventory as well as the net amount of goods purchased during the period at both cost and retail prices.

- Divide the cost of goods obtainable for sale by the retail price of the goods available for sale to find the cost/retail price ratio.

- Subtract the retail sales from the retail price of the goods available for sale to determine ending inventory at retail.

- Multiply the cost/retail price ratio or else percentage by the ending inventory at retail prices to reduce it to the ending inventory at cost.


Related Discussions:- Steps used in retail inventory method

Concepts of accounting, implication of applying aacounting concept wronly

implication of applying aacounting concept wronly

Location based commerce, .1  INTRODUCTION The world keeps developing new w...

.1  INTRODUCTION The world keeps developing new ways and technologies to help do things and achieve a timeline shorter compared to the way it previously used to be done. New techn

What is beer direct materials and raw materials?, What is Beer direct mater...

What is Beer direct materials and raw materials? Raw materials are the basic materials and parts that are to be used in the manufacturing process Raw materials that can be ph

CANADA PENSION PLAN REPORTING REQUIREMENTS ON THE T4, SCENARIO In May of t...

SCENARIO In May of the current year, your employer received a PIER report from the CRA that identified Canada Pension Plan (CPP) contribution deficiencies for employees in the org

Explain about depreciation expense, Q. Explain about Depreciation expense? ...

Q. Explain about Depreciation expense? Depreciation expense is the sum of asset cost assigned as an expense to a particular period. The method of recording depreciation expense

Eco-02, “Ledger is said to be the principal book entry and the transactions...

“Ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account.” Elaborate and explain why journal is necessary.

Shareholders and investors, Shareholders and Investors: as shareholders an...

Shareholders and Investors: as shareholders and the other investors have invested their wealth in a business activity, they are interested in understanding periodically regarding

Example of physical inventory, Q. Example of physical inventory? Taking...

Q. Example of physical inventory? Taking a physical inventory may perhaps disrupt the normal operations of a business. Therefore the count should be administered as quickly and

The beginning capital of the business totals $4, The beginning capital of t...

The beginning capital of the business totals $4,000. If the net income for the period totals $14,000 and the withdrawals by the owner total $3,000, what will be the new capital b

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd