Question

Presented below is information related to Skysong, Inc.

		Cost		Retail
Beginning inventory		$365,500		$645,000
Purchases		1,634,000		2,881,000
Freight on purchases		69,660
Markups				150,500
Markup cancellations				120,400
Abnormal shortage		12,900		22,360
Markdowns				75,680
Markdown cancellations				10,320
Employee discounts				4,472
Sales revenue				3,074,500
Sales returns				86,000
Normal shortage				15,050
Purchase returns		18,920		35,260

Compute ending inventory by the conventional retail inventory method. (Round percentages for computational purposes to 1 decimal place, e.g. 0.4158 to 41.6% and final answer to 0 decimal places, e.g. 5,275.)
What is the ending inventory?

Ending inventory

$ enter the ending inventory in dollars rounded to 0 decimal places

Answer 1

Answer: Ending inventory at cost = $ 247,556

Ending inventory at retail = $ 425,098

Working:

	Cost	Retail	Cost to retail ratio
Beginning inventory	$      365,500	$     645,000
Net purchases [purchases - purchase returns]	$   1,615,080	$ 2,845,740
Freight in	$         69,660
Net Markups [150500-120400]		$       30,100
Abnormal shortage	$       (12,900)	$      (22,360)
Cost of goods available for sale	$   2,037,340	$ 3,498,480	58.2%
Less:
Normal shortage		$      (15,050)
Net mark downs [75680-10320]		$      (65,360)
Net sales [3074500-86000]		$(2,988,500)
Employee discounts		$        (4,472)
Ending Inventory at retail		$     425,098
Ending Inventory at cost [425098*58.2%]	$      247,556