Answer:
$52,500
Explanation:
As per given data
Cost Retail
Beginning Inventory $30,000 $45,000
Cost of Goods Available for Sale $150,000 $180,000
Net Markups $25,000
Net Markdowns $10,000
Sales $170,000
As we do not have the ending inventory value, First we need to calculate it. We will make the selling price of all the available inventory at retail value then deducting the actual sales we will have the retail value of available stock. By applying the cost to retail ratio we can calculate the value of ending Inventory.
Cost Retail
Beginning Inventory $30,000 $45,000
Cost of Goods Available for Sale <u>$150,000</u> <u>$180,000</u>
Total Goods Available for sale $180,000 $225,000
+ Net Markups $25,000
- Net Markdowns <u> </u> <u>$10,000</u>
Sales price of Goods $180,000 $240,000
- Sales <u>$170,000 </u>
Ending Inventory at retail <u>$70,000</u>
Now calculate the cost to retail ratio to determine the ending value of inventory at conventional inventory method.
Cost to retail ratio = ( Sale price of goods at cost / Sale price of goods at retail ) x 100 = ( $180,000 / $240,000) x 100 = 75%
Value of Ending inventory at conventional method = $70,000 x 75% = $52,500
