The records of Ellen’s Boutique report the following data for the month of April
ID: 2467070 • Letter: T
Question
The records of Ellen’s Boutique report the following data for the month of April. Sales revenue $97,200 Purchases (at cost) $71,500 Sales returns 4,000 Purchases (at sales price) 97,600 Markups 11,300 Purchase returns (at cost) 4,000 Markup cancellations 1,400 Purchase returns (at sales price) 5,300 Markdowns 9,500 Beginning inventory (at cost) 23,055 Markdown cancellations 4,600 Beginning inventory (at sales price) 53,300 Freight on purchases 4,300 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 $
Explanation / Answer
Cost
Retail
Beginning inventory
23,055
53,300
Purchases
71,550
97,600
Purchase returns
(4,000)
(5,300)
Freight on purchases
4,300
Totals
94,855
145,600
markups
11,300
Markup cancellations
-1,400
total
94,855
155,500
Markdown
9,500
Markdown cancellations
-4,600
Sale price of goods available
160,400
Net sales (97,200 – 4,000)
- 93,200
Ending inventory at retail
67,200
Cost to retail ratio = 94,855/155,500 *100 = 61%
Ending inventory at cost = 67,200 @61% = 40,992
Cost
Retail
Beginning inventory
23,055
53,300
Purchases
71,550
97,600
Purchase returns
(4,000)
(5,300)
Freight on purchases
4,300
Totals
94,855
145,600
markups
11,300
Markup cancellations
-1,400
total
94,855
155,500
Markdown
9,500
Markdown cancellations
-4,600
Sale price of goods available
160,400
Net sales (97,200 – 4,000)
- 93,200
Ending inventory at retail
67,200
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