Question

Presented below is information related to Vaughn Company. Cost Retail Beginning inventory $252,960 $281,000 Purchases 1,368,000 2,097,000 Markups 93,700 Markup cancellations 15,700 Markdowns 36,900 Markdown cancellations 4,900 Sales revenue 2,243,000 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, e.g. 28,987.) Ending inventory using conventional retail inventory method $enter the dollar amount of the ending inventory using conventional retail inventory method

Answer 1

Answer:

                               Conventional Retail Method

                                               Cost        Retail      Cost to Retail ratio

Beginning Inventory          252,960    281,000

Add: Net Purchases          1,368,000  2,097,000

Add: Net Markups                                78,000    

                                                              2,456,000

Cost-to-retail Percentage                                        66.00% (1620960/2456000)

Less: Net Markdowns                          -32,000    

Goods Available for Sale  1,620,960   2,424,000

Less: Net Sales                                     -2,243,000

Estimated Ending Inventory at Retail $181,000

Estimated Ending Inventory at Cost  = $181,000*66% = $119,460