Question

Presented below is information related to Bonita Company.

		Cost		Retail
Beginning inventory		$252,960		$281,000
Purchases		1,368,000		2,097,000
Markups				93,700
Markup cancellations				15,700
Markdowns				36,900
Markdown cancellations				4,900
Sales revenue				2,243,000

Compute the 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

	Cost price	Retail price
Beginning inventory	$252,960	$281,000
Purchases	$1,368,000	$2,097,000
Net markups		$78,000 ($93,700-$15,700)
Totals	$1,620,960	$2,456,000

Cost to retail ratio = $1,620,960 / $2,456,000

= 0.66

Retai price total	$2,456,000
Net markdowns	($32,000) ($36,900-$4,900)
Total goods at retail	$2,424,000
Sales	($2,243,000)
Ending inventory at retail	$181,000

Ending inventory at cost = $181,000 * 0.66 = $119,460

Ending inventory using conventional retail inventory method $119,460