Exercise 9-21 Presented below is information related to Sweet Company Cost Retai

Question

Exercise 9-21 Presented below is information related to Sweet Company Cost Retail Beginning inventory Purchases Markups Markup cancellations Markdowns Markdown cancellations Sales revenue $292,298 $276,000 1,389,000 2,153,000 95,800 15,400 37,500 4,600 2,196,000 Compute the 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, eg. 28,987.) Ending inventory using conventional retail inventory method Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT

Explanation / Answer

Ending inventory using conventional retail inventory method: $187,935

Under the conventional retail inventory method, the cost to retail ratio is computed after markups and markup cancellations but before markdowns and markdown cancellations.

Cost to retail ratio = $1681298 / $2509400 = 67%

Ending inventory = Ending inventory at Retail x Cost to retail ratio = $280500 x 67% = $187935

Cost Retail Beginning inventory 292298 276000 Purchases 1389000 2153000 Merchandise available for sale 1681298 2429000 Add: Markups 95800 Less: Markup cancellations -15400 Net markups 80400 1681298 2509400 Deduct: Markdowns 37500 Less: Markdown cancellations -4600 Net markdowns 32900 1681298 2476500 Deduct: Sales revenue 2196000 Ending inventory at retail 280500

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