Kiddie World uses a periodic inventory system and the retail inventory method to

Question

Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the quarter ending September 30, 2018:

Estimate ending inventory and cost of goods sold (LIFO). (Round ratio calculation to 2 decimal places (i.e., 0.1234 should be entered as 12.34%.))

Cost Retail Beginning inventory $ 300,000 $ 450,000 Net purchases 861,000 1,210,000 Freight-in 22,000 Net markups 48,000 Net markdowns 18,000 Net sales 1,200,000 Answer is complete but not entirely correct. ost-to- Retail Ratio Cost Retail Beginning inventory Plus: Net purchases $ 300,000 450,000 861,000210,000 22,000 Freight-in Net markups 48,000 (18,000) 1,240,000 1,690,000 Less: Net markdowns Goods available for sale (excluding beg Invento 883,000 Goods available for sale (including beg Invento 1,183,000 Cost-to-retail percentage 70.00% (1.200,000) $ 490,000 Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold (343,000) $ 840,000

Explanation / Answer

Cost-to-retail percentage = 1183000/(1690000+18000)*100

= 1183000/1708000*100

= 69.26

Estimated ending inventory at cost (69.26% × $490,000) = $399,374

Cost Retail Cost-to-retail ratio Beginning inventory 300000 450000 Plus: Net purchases 861000 1210000     Freight-in 22000     Net markups 48000 Less- Net Markdowns (18000) Goods available for sale (Excluding beg. Inventory) 883000 1240000 Goods available for sale (Including beg. Inventory) 1183000 1690000 Cost-to-retail percentage 69.26 Less: Net sales (1200000) Estimated ending inventory at retail 490000 Estimated ending inventory at cost 399374 Estimated cost of goods sold 783626

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.