Question

# Disneyland uses the conventional retail method to determine its ending inventory at cost. Assume the beginning...

Disneyland uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were \$396000 (\$600000), purchases during the current year at cost (retail) were \$2175000 (\$3420000), freight-in on these purchases totaled \$135000, sales during the current year totaled \$3120000, and net markups (markdowns) were \$78000 (\$114000). What is the ending inventory value at cost? Hint: Round intermediate calculation to 3 decimal places, e.g. 0.635 and final answer to 0 decimal places.

Computation of Ending Inventory At Cost:

 Particulars Cost Retail Cost To Retail Ratio Beginning Inventory \$    3,96,000 \$    6,00,000 Add:Purchases \$ 21,75,000 \$ 34,20,000 Add:Freight In \$    1,35,000 Add:Mark Up \$       78,000 Goods Available for Sale \$ 27,06,000 \$ 40,98,000 Cost to Retail Percentage 66.032% Less:Net Market Down \$    1,14,000 Less:Net Sales \$ 31,20,000 Ending Inventory at Retail \$   8,64,000 Ending Inventory Value At Cost \$   5,70,518 Ending Inventory Value At Cost \$   5,70,518

Option B \$5,70,240 is near to \$5,70,518, So the Correct answer is Option B.

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