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Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the...

Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below:

   

Cost Retail
  Beginning inventory $48,000 $63,000
  Net purchases 153,000 215,000
  Net markups 22,000
  Net markdowns 35,000
  Net sales 221,000

   

To the nearest thousand, estimated ending inventory using the conventional retail method is (Do not round intermediate calculations):

   

Multiple Choice

  • $37,000.

  • $29,000.

  • $31,000.

  • $35,000.

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Answer #1

Ans:Option:2 $29000 is Correct Answer

Explanation:

Particulars Cost($) Retail($)
Beginning Inventory 48,000 63,000
Add:Net Purchases 153,000 215,000
201,000 278,000
Add:Net Markups - 22,000
Totals 201,000 300,000
Deduct:Net Markdowns - -35000
Sale Price of goods Available 265,000
Deduct: Sales Revenue 221,000
Ending Inventory at Retail 44,000
Cost to Retail Ratio 67.00% 201000/300000
Ending Inventory at Cost 29480 44000*0.67

To the nearest thousand 29480=29,000 (Rounded off to nearest Thousand)


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