Question

Wildhorse Inc. had beginning inventory of $11,900 at cost and $21,000 at retail. Net purchases were $140,679 at cost and $183,000 at retail. Net markups were $10,900, net markdowns were $7,500, and sales revenue was $132,700. Compute ending inventory at cost using the conventional retail method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using the conventional retail method

Answer 1

	Ending inventory at cost=Ending inventory at retail*Cost to retail %
	Under conventional retail method cost to retail % is computed by including markups but excluding markdowns
				Cost	Retail
	Beginning inventory			11900	21000
	Purchases (net)			140679	183000
	Net markups				10900
	Cost of goods available for sale			152579	214900
	Net markdowns				-7500
	Sales price of goods available				207400
	Less: Sales revenue				132700
	Ending inventory at retail				74700
	Cost to retail %=Cost of goods available at cost/Cost of goods available at retal=152579/214900=0.71=71%
	Ending inventory at cost=74700*71%=$ 53037