Nade ???nd uses a penodIC Inventory system and the retall Inventory metod to est
ID: 2557142 • Letter: N
Question
Nade ???nd uses a penodIC Inventory system and the retall Inventory metod to estimate ending Inventory and cost of goods sold. The following data are available for the quarter ending September 30, 2016 Cost Retail Beginning inventory$410,000 Net purchases Freight-in Net markups Net markdowns Net sales $545,000 910,000 1,320,000 44,400 59,000 29,000 1,255,000 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-to-Retail Ratio Cost Retail Beginning inventory Plus: Net purchases $410,000545,000 1,320,000 910,000 44,400 Freight-in Net markups Goods available for sale Less: Net markdowns Goods available for sale 59,000 1,924,000 29,000 1,895,000 1,364,400 Cost-to-retail percentage 1,255,000 $ 640,000 Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold $ 1,364,400Explanation / Answer
Answer
In Conventional Method, we Calculate Cost to retail ratio = Goods Available for sale at cost / Goods available for sale before net Markdowns at Retail
= $1,364,400 / $1,924,000
Cost to retail ratio = 70.91%
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