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Homework answers / question archive / The records of Shamrock's Boutique report the following data for the month of April
The records of Shamrock's Boutique report the following data for the month of April.
| Sales revenue | $100,100 | Purchases (at cost) | $47,400 |
| Sales returns | 1,900 | Purchases (at sales price) | 95,300 |
| Markups | 9,500 | Purchase returns (at cost) | 1,900 |
| Markup cancellations | 1,500 | Purchase returns (at sales price) | 2,900 |
| Markdowns | 9,800 | Beginning inventory (at cost) | 37,344 |
| Markdown cancellations | 2,800 | Beginning inventory (at sales price) | 48,800 |
| Freight on purchases | 2,200 |
Compute the ending inventory by the conventional retail inventory method.
Let us compute the ending inventory at retail. The convention retail inventory method includes markups but excludes markdowns.
| Cost | Retail | |
|---|---|---|
| Beginning inventory | $37,344 | $48,800 |
| Purchases | 47,400 | 95,300 |
| Purchase returns | (1,900) | (2,900) |
| Freight on purchases | 2,200 | |
| Cost of goods available for sale | 85,044 | 141,200 |
| Markups | 9,500 | |
| Markup cancellation | (1,500 ) | |
| Sales revenue | (100,100) | |
| Sales return | 1,900 | |
| Ending inventory | 51,000 |
Let us determine the cost-to-retail ratio.
Costtoretailratio=CostofgoodsavailableforsaleatcostCostofgoodsavailableforsaleatretail×100Costtoretailratio=85,044141,200×100Costtoretailratio=60.2%
The cost-to-retail ratio is 60.2%.
Now, we can determine the ending inventory at cost.
Endinginventoryatcost=Endinginventoryatretail×CosttoretailratioEndinginventoryatcost=51,000×60.2%Endinginventoryatcost=30,702
The ending inventory at cost is $30,702.
