Question

Crane Inc. had beginning inventory of $12,000 at cost and $19,600 at retail. Net purchases were $105,056 at cost and $159,600 at retail. Net markups were $9,600, net markdowns were $6,500, and sales revenue was $160,600. Compute ending inventory at cost using the conventional retail method.

Answer 1

Answer:

Crane Inc.

The ending inventory at cost using the conventional retail method is:

= $23,426.

Explanation:

a) Data and Calculations:

                                        Cost          Retail            

Beginning inventory    $12,000    $19,600

Net purchases             105,056    159,600

Net markups                                     9,600

Goods available        $126,656  $188,800

Ratio of cost to retail price = 67% ($126,656/$188,800)

Cost of goods sold     107,602 ($160,600 * 67%)

Ending inventory       $23,426