Presented below is information related to Bobby Engram Company.   00Cost00 0 Retail0  Beginning inventory $058,000 $100,000 Purchases (net) 122,000 200,000 Net markups   10,345 Net markdowns   26,135 Sales revenue   186,000 Instructions a.    Compute the ending inventory at retail. b.    Compute a cost-to-retail percentage (round to two decimals) under the following conditions. 1.    Excluding both markups and markdowns. 2.    Excluding markups but including markdowns. 3.    Excluding markdowns but including markups. 4.    Including both markdowns and markups. c.    Which of the methods in (b) above (1, 2, 3, or 4) does the following? 1.    Provides the most conservative estimate of ending inventory. 2.    Provides an approximation of lower-of-cost-or-market. 3.    Is used in the conventional retail method. d.    Compute ending inventory at lower-of-cost-or-market (round to nearest dollar). e.    Compute cost of goods sold based on (d). f.    Compute gross margin based on (d).

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A: INVENTORY VALUATIONInventory Valuation is a Method of Calculation of Value of Inventory at the End…

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Q: Compute the ending inventory at retail.

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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.