Question

# Presented below is information related to Culver Company. Cost Retail Beginning inventory \$194,276 \$276,000 Purchases 1,368,000...

Presented below is information related to Culver Company.

 Cost Retail Beginning inventory \$194,276 \$276,000 Purchases 1,368,000 2,164,000 Markups 93,900 Markup cancellations 14,100 Markdowns 32,800 Markdown cancellations 5,000 Sales revenue 2,239,000

Compute the inventory by the conventional retail inventory 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 conventional retail inventory method: \$_______

Solution :-

 Cost Retail Beginning inventory \$194,276 \$276,000 Purchases \$1,368,000 Total = 1,368,000 + 194,276 = \$1,562,276 = 276,000 + 2,164,000 = \$2,440,000 Net Markup : Markups \$93,900 Markup cancellations ( \$14,100 ) =  \$93,900 - \$14,100 = \$79,800 Totals \$1,562,276 = 2,440,000 + 79,800 = \$2,519,800 Net Markdown \$32,800 Markdowns \$5,000 Markdown cancellations = \$32,800 -\$5,000 = \$27,800 Sale price of good available = \$2,519,800 - \$27,800 = \$2,492,000 Sales \$2,239,000 Ending Inventory at retail = \$2,492,000 - \$2,239,000 = \$253,000

Cost to retail ratio = \$1,562,276 / \$2,519,800

= 0.62

= 62%

Cost to retail ratio = 62%

Ending inventory at cost = \$253,000 * 62%

= \$253,000 * 0.62

= \$156,860

Ending inventory at cost = \$156,860

 Ending inventory at cost by using conventional retail inventory method = \$156,860

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