C ezto.mheducation.com/im.p 3. vle value 4.00 points Smith-Kline Company maintai

Question

C ezto.mheducation.com/im.p 3. vle value 4.00 points Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2016, the records indicate the following data Retail Beginning inventory Purchases Freight-in on purchases Purchase returns Cost 85 130 676 1,011 35 Net markups Net markdowns Net sales 921 Required: Use the retail method to approximate cost of ending inventory in each of the following ways. (Enter your answers in thousands. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.) Ending nventory (S in 000s) 1. Average cost 2. Conventional eBook & Resources LATITUDE E5400

Explanation / Answer

   ($ in 000s)                                                                      Cost            Retail

Beginning inventory                                                    $ 85           $   130

Purchases                                                                      676             1,011

Freight-in on purchases                                                   35

Purchase returns                                                               (1)                 (2)

Net markups                                                                                           3

Net markdowns                                                             ___                  (7)

Goods available for sale                                               $795             1,135

              Cost-to-retail percentages:

Average cost ratio:              $795 ÷ $1,135 =               .7004

Average (LCM) cost ratio:   $795 ÷ ($1,135 + $7) =    .6961

Deduct: Net sales                                                                              (921)

Ending inventory:

     At retail (sales price)                                                                    $   214

     At Average cost                   ($214 x .7004)           $149.89

     At Average (LCM)             ($214 x .6961)           $148.97

Note that the lower of cost or market cost-to-retail percentage is approximated by excluding net markdowns.

Note: I have tried my best for correct solution, still if you find any difficulty please ask in comment.

Cost       Retail Beginning inventory $112,000 $161,000 Plus: Net purchases 325,080 538,000 Net markups 14,200 Less: Net markdowns _______ -8,400 Goods available for sale (excluding beg. Inventory) 325,080 543,800 Goods available for sale (including beg. Inventory) 437,080 704,800 Cost-to-retail percentage:   = 325080 ÷ 543800 = 59.78% Less: Net sales -518,000 Estimated ending inventory at retail $186,800 Estimated ending inventory at cost:                                             Retail                     Cost Beginning inventory $161,000              $112,000 Current period’s layer   25,800 x 59.78% =    15,423               Total                    $186,800           $96,577 -96,577 Estimated cost of goods sold $340,503

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

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