Kiddie World uses a periodic inventory system and the retail inventory method to

Question

Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the quarter ending September 30, 2018:

Estimate ending inventory and cost of goods sold using the conventional method. (Round ratio calculation to 2 decimal places (i.e., 0.1234 should be entered as 12.34%.))

Cost Retail Beginning inventory $ 370,000 $ 515,000 Net purchases 890,000 1,280,000 Freight-in 54,000 Net markups 55,000 Net markdowns 25,000 Net sales 1,235,000

Explanation / Answer

Cost-to-retail percentage = $1,314,000 / $1,850,000 = 71.03%
Estimated ending inventory at cost = 71.03% x   $590,000 = $419,077

Cost Retail Cost-to-Retail Ratio Beginning inventory $370,000 $515,000 Plus: Net purchases 890,000 1,280,000   Freight-in 54,000   Net markups 55,000 Goods available for sale 1,850,000 Less: Net markdowns (25,000) Goods available for sale 1,314,000 1,825,000 Cost-to-retail percentage 71.03% Less: Net sales (1,235,000) Estimated ending inventory at retail $590,000 Estimated ending inventory at cost $419,077

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.