Chapter 6, Problem 16BE

To determine

Inventory Valuation:

Sometimes, the management keeps the complete records of the inventory on the basis of retail price offered to the customer. However, there might be some of the records available for such inventory reflecting the cost price as well like purchase invoice, ending stock at cost reflecting in previous financial statement.
In such situation, the need is to compute the inventory at cost price, which is required for reflecting in financial statement. This can be done on the basis of mark-up percentage computed for the goods in hand (i.e. purchases and beginning inventory) for which cost and retail price is available on an average basis.
The ending inventory at retail price is computed by deducting sales at retail price from the total goods available at retail price. Then the markup amount is deducted from such inventory valuation to arrive at the figure of the ending inventory at cost price.

To Determine: Thecomputation of Inventory valuation at cost for the year ending 2015.