Brief Exercise 9-8 Boyne Inc. had beginning inventory of $18,900 at cost and $28
ID: 2472085 • Letter: B
Question
Brief Exercise 9-8
Boyne Inc. had beginning inventory of $18,900 at cost and $28,100 at retail. Net purchases were $128,932 at cost and $176,400 at retail. Net markups were $12,900; net markdowns were $8,700; and sales revenue was $155,300. Compute ending inventory at cost using the conventional retail method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)
Brief Exercise 9-8
Boyne Inc. had beginning inventory of $18,900 at cost and $28,100 at retail. Net purchases were $128,932 at cost and $176,400 at retail. Net markups were $12,900; net markdowns were $8,700; and sales revenue was $155,300. Compute ending inventory at cost using the conventional retail method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)
Explanation / Answer
The retail inventory method is sometimes used by retailers that resell merchandise to estimate their ending inventory balances. This method is based on the relationship between the cost of merchandise and its retail price.
Inventory at end = Cost of goods available for sale - Cost of sales during the period
Cost of goods available for sale = Cost of beginning inventory + Cost of purchases
Beginning Inventory Cost =
$ 28,100.00
Net Purchase =
$ 1,76,400.00
Cost of goods available for sale =
$ 2,04,500.00
Cost of Sales
Sales
$ 1,55,300.00
Mark up
$ -12,900.00
Mark Down
$ 8,700.00
Cost of Sales
$ 1,51,100.00
Inventory at end =
$ 53,400.00
Inventory at end = Cost of goods available for sale - Cost of sales during the period
Cost of goods available for sale = Cost of beginning inventory + Cost of purchases
Beginning Inventory Cost =
$ 28,100.00
Net Purchase =
$ 1,76,400.00
Cost of goods available for sale =
$ 2,04,500.00
Cost of Sales
Sales
$ 1,55,300.00
Mark up
$ -12,900.00
Mark Down
$ 8,700.00
Cost of Sales
$ 1,51,100.00
Inventory at end =
$ 53,400.00
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