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Valuing Inventory Using Conventional Retail Method Dean Company uses the conventional retail method to estimate its...

Valuing Inventory Using Conventional Retail Method

Dean Company uses the conventional retail method to estimate its inventory for interim statement disclosures. Data relating to the computation of the inventory at July 31, 2020, follow. Compute estimated inventory on July 31, 2020, using the conventional retail method.

Cost Retail

Beginning inventory, February 1, 2020 $108,000  $150,000

Purchases 612,000 945,000

Markups, net 105,000

Sales 1,035,000

Markdowns, net 75,000

Ending Inventory at cost $_______

please show work!!!!

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Answer #1

Convetional Retail Method

Descriptions Cost $ Retail $
Inventory, February1,2020 108,000 150,000
Add: Net Purchases 612,000 945,000
Add: Net Mark up 105,000
Less: Net Mark down    (75,000)

Cost to Retail percentage

($720000/$1125000)*100=64%

 $720,000 $1,125,000
Less: Sales of February 1,035,000
Estimated ending inventory @Retail $90,000
Estimated Ending Inventory @Cost ($90000*64%) $57,600

Ending Inventory at cost $ 57,600

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