Problem 2: Inventory – Retail Method of Estimating Inventory Vancy Company uses the conventional retail inventory method (lower of cost or market) to estimate its ending inventory. Here is information for the current year. At Cost At Retail Beginning Inventory ........................ $70,800......... $ 98,500 Purchases ......................................... 219,500.......... 294,000 Purchase returns and allowances ........ 4,300.............. 5,500 Markups ..................................................................... 63,000 Markup cancellations ................................................. 10,000 Markdowns ................................................................ 35,000 Markdown cancellations ............................................ 20,000 Sales ......................................................................... 345,000 Sales returns and allowances ..................................... 10,000 Required:1.What is the cost/retail ratio for the current year? Show your computations! 2. Disregard your answer to part (1) and assume that the cost/retail ratio is 70%. What is the estimated cost of the ending inventory? Show your computations!
Problem 2: Inventory – Retail Method of Estimating Inventory
Vancy Company uses the conventional retail inventory method (lower of cost or market) to estimate its ending inventory. Here is information for the current year.
At Cost At Retail
Beginning Inventory ........................ $70,800......... $ 98,500
Purchases ......................................... 219,500.......... 294,000
Purchase returns and allowances ........ 4,300.............. 5,500
Markups ..................................................................... 63,000
Markup cancellations ................................................. 10,000
Markdowns ................................................................ 35,000
Markdown cancellations ............................................ 20,000
Sales ......................................................................... 345,000
Sales returns and allowances ..................................... 10,000
Required:1.What is the cost/retail ratio for the current year? Show your computations!
2. Disregard your answer to part (1) and assume that the cost/retail ratio is 70%. What is the estimated cost of the ending inventory? Show your computations!
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