Exercise 9-21 Presented below is information related to Coronado Company Cost Re

Question

Exercise 9-21 Presented below is information related to Coronado Company Cost Retail Beginning inventory Purchases Markups Markup cancellations Markdowns Markdown cancellations Sales revenue $280,390 $283,000 397,000 2,178,000 96,800 16,300 33,000 5,500 2,226,000 Compute the inventory by the conventional retail inventory method. (Round ratios for computational purposes to O decimal places, e.g. 78% and final answer to O decimal places, e.g. 28,987.) Ending inventory using conventional retail inventory methood

Explanation / Answer

Solution: 9-21. Ending inventory using conventional retail inventory method   $ 190,080 Working Notes: Cost Retail a Beginning inventory 280,390 283,000 b Purchases 1,397,000 2,178,000 c=a+b Totals 1,677,390 2,461,000 Add: Net markups: d Markups 96,800 e Markup cancellations (16,300) f=d-e 80,500 g= f + c Total cost 1,677,390 2,541,500 Deduct: Net markdowns: h Markdowns 33,000 i Markdown cancellations (5,500) j = h-j 27,500 k=g-j Sales price of goods available 2,514,000 l Deduct: Sales 2,226,000 m=k-l Ending inventory, at retail 288,000 using g. Cost-to-retail ratio = Total cost as per cost/total cost as per retail =1,677,390/2,541,500 =0.66 =66% Ending inventory at cost = Ending inventory, at retail x Cost-to-retail ratio =288,000 x 66% =$190,080 9-22. Ending inventory using conventional retail inventory method    $ 18,880 Working Notes: Cost Retail a Beginning inventory 33,024 48,200 b Purchases 51,200 89,300 1 Purchase returns (2,100) (3,200) 2 Freight on purchases 2,600 0 c=a+b - 1 + 2 Totals 84,724 134,300 Add: Net markups: d Markups 10,900 e Markup cancellations (1,600) f=d-e 9,300 g= f + c Total cost 84,724 143,600 Deduct: Net markdowns: h Markdowns 8,700 i Markdown cancellations (2,900) j = h-j 5,800 k=g-j Sales price of goods available 137,800 l Deduct: Net Sales (107,900-2,100) 105,800 m=k-l Ending inventory, at retail 32,000 using g. Cost-to-retail ratio = Total cost as per cost/total cost as per retail =84,724/143,600 =0.59 =59% Ending inventory at cost = Ending inventory, at retail x Cost-to-retail ratio =32,000 x 59% =$18,880 Please feel free to ask if anything about above solution in comment section of the question.

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