Answered

Welcome to Westonci.ca, where curiosity meets expertise. Ask any question and receive fast, accurate answers from our knowledgeable community. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Ivanhoe uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $392000 ($596000), purchases during the current year at cost (retail) were $2095000 ($3340000), freight-in on these purchases totaled $131000, sales during the current year totaled $3040000, and net markups (markdowns) were $74000 ($110000). What is the ending inventory value at cost

Sagot :

Tundexi

Answer:

$561,580

Explanation

Particulars                                     Cost             Retail

Beginning inventory                $392,000       $596,000

Add: Purchases                       $2,095,000    $3,340,000

Add: Freight in                         $131,000

Add: Net Markups                                           $74,000  

Goods available for sale        $2,618,000     $4,010,000

Less: Net Markdowns                                     ($110,000)

Less: Sales                                                      ($3,040,000)

Estimated Ending inventory at retail           $860,000  

Cost-to-Retail percentage = Goods available for sale (Cost) / Goods available for sale (Retail)

Cost-to-Retail percentage = $2,618,000 / $4,010,000

Cost-to-Retail percentage = 0.653

Estimated ending inventory at cost = Estimated Ending inventory at retail * Cost-to-Retail percentage

Estimated ending inventory at cost = $860,000 * 0.653

Estimated ending inventory at cost = $561,580

We appreciate your time on our site. Don't hesitate to return whenever you have more questions or need further clarification. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.