A (LO4) ding inv 539,000 RETAIL INVENTORY METHOD The following information is pr

Question

A (LO4) ding inv 539,000 RETAIL INVENTORY METHOD The following information is provided by Raynette's Pharmacy for the last quarter of its fiscal year ending on March 31,20- Cost Retail Inventory, start of period, January 1,20 Net purchases during the period Net sales for the period 32,000 $2,000 176,000 268,000 260,000 REQUIRED 1. Estimate the ending inventory as of March 31 using the retail inventory method. 2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method

Explanation / Answer

Cost retail Ratio Beginning inventory 32000 52000 Purchases 176000 268000 Cost of goods available for sale 208000 320000 65% Less Sales 260000 Ending inventory 60000 X cost to retail ratio 0.65 Ending inventory 39000 Cost of goods sold Cost of goods available for sale 208000 Less Ending inventory 39000 Cost of goods sold 169000

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