Question

Wall -to- wall records' April 1 inventory had a cost of $48,000 and a retail value of $70,000. During April, net purchases cost $210,000 with a retail value of $390,000. Net sales at retail for Wall-to-Wall Records for April were $280,000. Calculate the cost of ending inventory using the retail inventory method. (Round to the nearest hundredth percent.)

Answer 1

Answer:

The correct answer is that the cost of the ending inventory using the retail inventory method is US$ 100,962

Explanation:

Wall-to-Wall Records

                                        Cost          Retail

Beginning Inventory $ 48,000 $ 70,000

Purchases                     $ 210,000       $ 390,000

Cost of Goods Available for Sale $ 258,000 $ 460,000

Cost to Retail Ratio

= $ 258,000 ÷ $ 460,000

= 0.5609 = 56.09%

                                                    Cost            Retail

Cost of Goods Available for Sale $ 258,000   $ 460,000

− Sales                                                                 $ 280,000

Ending Inventory                                          $ 180,000

× Cost to Retail Ratio                                    0.5609

Ending Inventory                           $ 100,962