Question

Turturro Department Store utilizes the retail inventory method to estimate its inventories. It calculated its cost to retail ratio during the period at 75%. Goods available for sale at retail amounted to $400,000 and goods were sold during the period for $280,000. The estimated cost of the ending inventory is?

Answer 1

Answer:

The estimated cost of the ending inventory is $120,000

Explanation:

Retail Inventory method is used to estimate the value of inventory using retail price of the inventory.

Ending inventory is the value of Inventory in store at the end of accounting period. It is calculated as follow

Closing Inventory value = Goods available for sales - Goods sold during the period

As the Inventory is already given in the retail value

Closing Inventory value = $400,000 - $280,000 = $120,000