Question

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

Sales revenue		$106,300		Purchases (at cost)		$51,500
Sales returns		2,100		Purchases (at sales price)		88,500
Markups		10,100		Purchase returns (at cost)		2,100
Markup cancellations		1,700		Purchase returns (at sales price)		3,000
Markdowns		9,800		Beginning inventory (at cost)		17,564
Markdown cancellations		2,900		Beginning inventory (at sales price)		42,500
Freight on purchases		2,600

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

Answer:-Ending inventory using conventional retail inventory method= $12903

Explanation:-

Particulars	Cost		Retail
	$	$	$
Beginning Inventory	17564		42500
Purchases	51500		88500
Purchase returns	-2100		-3000
Freight on purchases	2600
Total	69564		128000
Add:- Net markups:
Markups		10100
Markup cancellations		-1700	8400
	69564		136400
Less:-Net markdowns:
Markdowns		9800
Markdown cancellations		-2900	6900
Sales price of goods available			129500
Less:-Net sales		$106300-$2100	104200
Ending inventory at retail			25300

Cost to retail ratio =($69564/$136400)*100 =51%

Ending inventory using conventional retail inventory method=$25300*51%

=$12903