Question

Crane uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $378000 ($582000), purchases during the current year at cost (retail) were $1815000 ($3060000), freight-in on these purchases totaled $117000, sales during the current year totaled $2760000, and net markups (markdowns) were $60000 ($96000). What is the ending inventory value at cost

Answer 1

Answer:

$524,520

Explanation:

The computation of the ending inventory at cost is shown below:

Particulars                          Cost Retail

Beginning Inventory $378,000      $582,000

Purchases                $1,815,000     $3,060,000

Freight In                $117,000  

Net Mark ups                                  $60,000

Total                       $2,310,000      $3,702,000     (62%)

Net Mark Downs                           -$96,000

Sales                                           -$2,760,000

Ending Inventory       $2,310,000           $846,000

So, at 62%, the ending inventory is

= $846,000 × 62%

= $524,520