Question

Retail Inventory Method

The following information is provided by Raynette's Pharmacy for the last quarter of its fiscal year ending on March 31, 20--:

	Cost		Retail
Inventory, start of period, January 1, 20--		$32,100		$51,600
Net purchases during the period		173,340		269,400
Net sales for the period				256,700

Required:

1. Estimate the ending inventory as of March 31 using the retail inventory method.
$fill in the blank 1

2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.
$fill in the blank 2

Answer 1

Retail inventory method:

Cost of goods available for sale is computed for both cost and retail.

Based on cost of goods available for sale amount, cost to retail percentage is computed.

Cost to retail ratio is applied to arrive at ending inventory and cost of goods sold.

1. Ending inventory as of March 31 = 41,152 $

2. Cost of goods sold for the period = 164,288 $