Answer:
The question is missing the below options:
A.$135,000.
B.$73,125.
C.$78,300.
D.$72,900.
E.$105,000.
The correct option is C,$78,300
Explanation:
At cost At retail Cost to retail ratio
$ $
Beginning inventory 80,000 130,000
Net purchases 65,000 120,000
Costs of goods available 145,000 250,000 145000=250000=58%
Since the cost to retail ratio is 58% and the year end inventory is $135000 in retail prices, the cost o year end inventory can be computed as 58% of retail prices
Cost of closing inventory=58%*$135,000
Cost of closing inventory =$78,300
This implies that the mark-up added to cost is 42%(retail price of 100% minus cost of 58%)
