Question

Question 4

Sunshine Snacks uses the conventional retail inventory method to estimate its inventory cost.

Presented below is the relevant inventory information for the year to December 31, 2019.

Cost Retail

Inventory (January 1, 2019) $375,000 $ 550,000

Purchases 1,369,000 2,050,000

Purchase returns 90,000 120,000

Purchase discounts 27,000 –

Gross sales (after employee discounts) – 2,110,000

Sales returns – 145,000

Markups – 180,000

Markup cancellations – 60,000

Markdowns – 65,000

Markdown cancellations 30,000

Freight-in 63,000 –

Employee discounts granted – 12,000

Loss from breakage (normal) – 8,000

Required:

Compute the cost of Sunshine Snacks ending inventory at December 31, 2019. Express the costto-retail ratio as a whole number.

Answer 1