1.00 points Word Problem 18-25 [LU 18-2 (1] May\'s Dress Shop\'s inventory at co

ID: 1171675 • Letter: 1

Question

1.00 points Word Problem 18-25 [LU 18-2 (1] May's Dress Shop's inventory at cost on January 1 was $41,000. Its retail value was $61,000. During the year, May purchased additional merchandise at a cost of S195,400 with a retail value of 5395,400. The net sales at retail for the year were $350,000. Calculate May's inventory at cost by the retail method. (Round the "cost ratio" to the nearest whole percent.) Cost ??:1 S 41,000 195,400 61,000 395,400 Beginning inventory Purchases Cost of goods available for sale Less net sales for year Ending inventory at retail Ending inventory at cost

Explanation / Answer

Cost ($)

Retail ($)

Beginning Inventory

41,000

61,000

Purchases

195,400

395,400

Cost of Goods available for sale

236,400

456,400

Less : Net Sales for the year

350,000

Ending Inventory at retail

106400

Cost Ratio

52%

Ending Inventory at cost

$55,328

Cost Ratio = [$236,400 / 456,400 ] x 100 = 52%

Ending Inventory at cost = $106,400 x 52% = $55,328