The records of Ellen’s Boutique report the following data for the month of April
ID: 2446500 • Letter: T
Question
The records of Ellen’s Boutique report the following data for the month of April.
Sales revenue
$97,700
Purchases (at cost)
$57,300
Sales returns
3,000
Purchases (at sales price)
88,700
Markups
11,100
Purchase returns (at cost)
3,000
Markup cancellations
1,300
Purchase returns (at sales price)
4,000
Markdowns
9,400
Beginning inventory (at cost)
34,808
Markdown cancellations
3,800
Beginning inventory (at sales price)
50,200
Freight on purchases
3,500
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
$
Sales revenue
$97,700
Purchases (at cost)
$57,300
Sales returns
3,000
Purchases (at sales price)
88,700
Markups
11,100
Purchase returns (at cost)
3,000
Markup cancellations
1,300
Purchase returns (at sales price)
4,000
Markdowns
9,400
Beginning inventory (at cost)
34,808
Markdown cancellations
3,800
Beginning inventory (at sales price)
50,200
Freight on purchases
3,500
Explanation / Answer
At Cost - $ At Original Retail - $
BI 34808 50200
Purchases 57300 88700
Purchase Ret. (3000) (4000)
Freight 3500
Tot. Inv. 92608 134900
Mark-ups 11100
Mark -up Cancl. (1300)
Total after Mark-ups 92608 144700
Tot.Inv. after mark downs 92608 144700-9400+3800 = 139100
Conventional Cost to Retail Ratio = Inv. at cost/Inv. at retail with mark ups
= 92608/144700 = 0.64 or 64%
Sales 97700
Sales ret. (3000)
Net Sales 94700
EI Retail = Tot inv at retail - net sales
= 139100 - 94700 = $ 44400
EI at cost = EI at retail * cost to retail ratio = 44400*0.64 = $28416
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