Question

Swifty Inc. had beginning inventory of $11,000 at cost and $19,800 at retail. Net purchases were $122,300 at cost and $184,200 at retail. Net markups were $11,000, net markdowns were $7,000, and sales revenue was $140,100. Compute ending inventory at cost using the conventional retail method.

Answer 1

Answer:

Ending inventory at cost = $42,098

Explanation:

As per the data given in the question,

                                         Cost price         Retail price

Beginning inventory           $11,000           $19,800

Purchases                         $122,300          $184,200

Net Markups                                               $11,000

Totals                               $133,300           $215,000

Cost of retail ratio = $133,300 ÷ $215,000

= 62%

Retail price total $215,000

Less: Net Markdowns $7,000

Total goods at retail $208,000

Less: Sales $140,100

Ending Inventory at retail $67,900

Ending inventory at cost = $67,900 × 62%

= $42,098