Question

# Crane Pet supply uses the conventional retail method to determine its ending inventory at cost. Assume...

Crane Pet supply uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were \$795800 (\$979700), purchases during the current year at cost (retail) were \$3185800 (\$4138300), freight-in on these purchases totaled \$190700, sales during the current year totaled \$4036000, and net markups (markdowns) were \$5900 (\$287900). What is the ending inventory value at cost?

 Cost Retail Beginning inventory 795800 979700 Add: Purchases 3185800 4138300 Add: Freight-in 190700 Add: Mark-up 5900 Goods available for sale 4172300 5123900 Cost to retail ratio (4172300/5123900) 81.4% Less: Sales -4036000 Less: Mark-down -287900 Ending inventory at retail 800000 Ending inventory at cost = Ending inventory at retail x Cost to retail ratio Ending inventory at cost = 800000 x 81.4% = 651,200

Therefore, ending inventory value at cost is \$651,200.

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