Question

Lacy's Linen Mart uses the average cost retail method to estimate inventories. Data for the first six months of 2021 include: beginning inventory at cost and retail were $88,500 and $139,000, net purchases at cost and retail were $331,000 and $499,000, and sales during the first six months totaled $509,000. The estimated inventory at June 30, 2021, would be:

Answer 1

Answer:

$83,850

Explanation:

Lacy's Linen Mart

Cost Retail

Beginning inventory$88,500 $139,000

Add: net purchases$331,000 $499,000

Goods available for sale$419,500 $638,000

Cost-to-retail percentage

= $419,500÷ $638,000 = 65%

Less: Net sales($509,000)

Estimated ending inventory at retail

($638,000 -$509,000) $ 129,000

Estimated ending inventory at cost(65% x $129,000)$83,850

Therefore the estimated inventory at June 30, 2021, would be $83,850