Question

California Corp. is preparing the financial statements at its fiscal year end, January 31, 2018. The...

California Corp. is preparing the financial statements at its fiscal year end, January 31, 2018. The following information is available:

At Cost

At Retail

Inventory, February 1, 2017

$ 83,400

$ 103,400

Markdowns

47,000

Markups

71,000

Markdown Cancellations

22,000

Markup Cancellations

9,000

Purchases

241,200

294,300

Sales

329,000

Purchases returns and allowance

5,150

6,700

Sales returns and allowances

9,000

Instructions

Calculate the ending inventory at cost at January 31, 2018, using the retail method that approximates lower of average cost and market. Your solution should be in good form with amounts clearly labelled. Carry the cost ratio to two decimals, e.g., 12.34%.

Business   Accounting   
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Homework Answers

Answer #1
Particulars Cost ($) Retail ($) Cost to Retail %
Inventory Feb 1, 2017 83,400.00 103,400.00
Purchases 241,200.00 294,300.00
Purchases Returns (5,150.00) (6,700.00)
Markups 71,000.00
Markups Cancellations (9,000.00)
Current year Additions 236,050.00 349,600.00
Goods available for sale 319,450.00 453,000.00 70.52%
Markdown    (47,000.00)
Markdown Cancellations 22,000.00
Sales (Net of Returns) (320,000.00)
Ending Inventory at Retail 108,000.00
Ending inventory at cost at 31.01.2018

$1,08,000*70.52% = 76,161.60
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