Question

When you undertook the preparation of the financial statements for Oriole Company at January 31, 2021, the following data were available: At Cost At Retail Inventory, February 1, 2020 $83,470 $99,500 Markdowns 35,200 Markups 64,000 Markdown cancellations 19,200 Markup cancellations 9,000 Purchases 226,000 286,500 Sales revenue 310,000 Purchases returns and allowances 4,900 5,900 Sales returns and allowances 9,400 Compute the ending inventory at cost as of January 31, 2021, using the retail method which approximates lower of cost or market. Ending inventory at cost

Answer 1

Answer:

See below

Explanation:

Cost Retail

Beginning inventory 83,470 99,500

Add: Purchases 226,000 286,500

Less:

Purchases return (4,900) (5,900)

Add:

Net markups

(64,000 - 9,000) ---------- 55,000

Balance 304,570 380,100

Cost to retail percentage 80%

304,570/380,100

Less:

Net markdowns

(35,200 - 19,200) ----------- (16,000)

Goods available for sale 304,570 364,100

Less: Net sales

(310,000 - 9,400) ------- (300,600)

Estimated ending inventories at retail prices ---------- 63,500

Estimated ending inventory at cost

(63,500 × 80%) (50,800) ---------

Estimated cost of goods sold 253,770

Ending inventory at cost using the retail method is $50,800