Chapter 5, Problem 9PSB

To determine

Inventory:

Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.

Retail Inventory Method:

The method wherein cost of the goods sold as well as the value of the ending stock items are deduced by the using the cost and retail relationship is term as retail inventory method.

The ending inventory at cost with the use of retail inventory method.

2.

To determine

To compute: Company’s loss from shrinkage at cost and at retail.