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Hawkeye Auto Parts uses the average cost retail method to estimate inventories. Data for the first six months of 2021 include: beginning inventory at cost and retail were $59,000 and $104,000, net purchases at cost and retail were $789,000 and $1,304,000, and sales during the first six months totaled $804,000. The estimated inventory at June 30, 2021, would be:

Sagot :

abiolataiwo2015

Answer:

$365,600

Explanation:

Calculation to determine what The estimated inventory at June 30, 2021, would be:

First step is to calculate the Cost to retail ratio

Cost to retail ratio = ($59,000 + $789,000)/($104,000 + $1,304,000)

Cost to retail ratio = $848,000/$1,408,000

Cost to retail ratio = 0.60

Second step is to calculate the Cost of goods sold

Cost of goods sold = $804,000 x 0.6

Cost of goods sold= $482,400

Now let calculate the estimated inventory at June 30, 2021

Estimated Inventory at June 30, 2021 = $59,000 + $789,000 - $482,400

Estimated Inventory at June 30, 2021 = $365,600

Therefore The estimated inventory at June 30, 2021, would be:$365,600

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