Question

The records of Ayayai’s Boutique report the following data for the month of April.

Sales revenue		$102,900		Purchases (at cost)		$50,100
Sales returns		2,100		Purchases (at sales price)		85,600
Markups		9,900		Purchase returns (at cost)		2,100
Markup cancellations		1,500		Purchase returns (at sales price)		3,000
Markdowns		10,200		Beginning inventory (at cost)		27,818
Markdown cancellations		2,900		Beginning inventory (at sales price)		46,400
Freight on purchases		2,500

Compute the ending inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using conventional retail inventory method

Answer 1

Particular	Cost		Retail
Beginning inventory	27,818		46,400
Purchase	$50,100		$85,600
Purchase return	($2,100)		($3,000)
Freight on purchase	$2,500
Total	$78,318		$129,000
Add: Net markups
Mark ups		$9,900
Mark ups cancellation		($1,500)	$8,400
	$78,318		$137,400
Deduct: Net markdown
Markdown		$10,200
Markdown cancellation		($2,900)	($7,300)
Net Mark down			($7,300)
Sales price of goods available			$130,100
Deduct : Net sales ($102,900 - $2,100)			$100,800
Ending inventory @ Retail			$29,300

Cost to Retail Ratio = $78,318 / $137,400 = 57%

Ending inventory at cost = 57% * $29,300 = $16,701