The Kansas Company provided the following data for its December 31, 2004, inventory maintained on the retail basis.                                                              At Cost                At Retail Beginning inventory                             $104,000             $224,000 Purchases                                                280,000              396,000 Markups (net)                                                                      20,000 Markdowns (net)                                                               (40,000) Sales                                                                                  520,000 What is the estimated inventory at December 31, 2004, valued at lower of average cost or market? a. $53,333 b. $75,000 c. $56,000 d. $48,000 please show work:  Cost to retail ratio = (104,000 + 280,000) / (224,000 + 396,000 + 20,000) = 0.6 Estimated cost of EI = ____ * 0.6 = ?

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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.