Question

Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below:
   

	Cost			Retail
Beginning inventory	$	50,000		$	67,000
Net purchases		158,000			223,000
Net markups					26,000
Net markdowns					39,000
Net sales					224,000

   
The conventional cost-to-retail percentage (rounded) is:

Answer 1

Answer:

The conventional cost-to-retail percentage (rounded) is: 66%

Calculations:

	Cost	Retail	Cost to retail percentage
Beginning inventory	$ 50,000	$ 67,000
Add: Net Purchases	$ 158,000	$ 223,000
Totals	$ 208,000	$ 290,000
Add: Net markups
Markups		$ 26,000
Totals	$ 208,000	$ 316,000	66% [$208,000/$316,000]
Markdowns:
(Less): Net Markdowns		($ 39,000)
Goods available for sale		$ 277,000
(Less): Net sales		($ 224,000)
Ending inventory at retail		$ 53,000
Cost of retail ratio:		66%
Ending inventory at cost		$ 34,980