The records of Teal’s Boutique report the following data for the month of April.

Question

The records of Teal’s Boutique report the following data for the month of April.

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.)

Sales revenue $108,600 Purchases (at cost) $49,700 Sales returns 1,900 Purchases (at sales price) 92,100 Markups 9,200 Purchase returns (at cost) 1,900 Markup cancellations 1,300 Purchase returns (at sales price) 2,800 Markdowns 8,300 Beginning inventory (at cost) 35,220 Markdown cancellations 2,600 Beginning inventory (at sales price) 45,000 Freight on purchases 2,300

Explanation / Answer

Teal's Boutique Cost Retail Beginning Inventory            35,220          45,000 Purcahses        49,700            92,100 Less: Purchase returns        (1,900)            (2,800) Add: Freight on purchases          2,300                     -   Purchases (Net)            50,100          89,300 Merchandise avaialble for sale: Add: Markups              9,200 Less: Markup cancellations            (1,300) Net markups            7,900            85,320       142,200 Deduct: Markdowns              8,300 Less: Markdown calculations            (2,600)            5,700            85,320       136,500 Deduct: Sales (net)       106,700 Ending inventory at retail          29,800 Cost to retail ratio = Cost of Goods Available Original Retail Price of Goods Available, Plus Net Markups =        85,320 =60%      142,200 Ending inventory at cost ($29,800 X60%)            17,880 Ending inventory at lower of cost or market                                 17,880

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