Question

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: $_______

Answer 1

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