Debbie’s Bling Shop uses the lower of average cost or market retail inventory method to determine its ending inventory. The accounting records for the current year for Debbie’s contained the following information:   Cost Retail Beginning inventory $19,000 $ 27,500 Purchases 71,500 94,000 Sales   105,000 Net markups   5,167 Net markdowns   3,067 ​ In addition, the accounting records for Debbie’s disclosed that freight-in charges were $6,700 and sales returns were $2,833. What is the cost-to-retail percentage to be used for ending inventory calculations?   a.  71.4%   b.  73.2%   c.  76.7%   d.  78.6%

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Q: What is the cost-to-retail percentage to be used for ending inventory calculations

A:

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.