The following data concerning the retail inventory method are taken from the fin

Question

The following data concerning the retail inventory method are taken from the financial records of Sandhill Company.

Cost

Retail

$ 204000

$ 288000

904000

1360000

24800

—

—

80800

—

56800

—

1424000

If the ending inventory is to be valued at approximately the lower of cost or market, the calculation of the cost-to-retail ratio should be based on goods available for sale at (1) cost and (2) retail, respectively of

A) 1,132,800 and 1,672,000

B) 1,132,800 and 1,648,000

C) 1,108,000 and 1,648,000

D) 1,132,800 and 1,728,800

Cost

Retail

Beginning inventory

$ 204000

$ 288000

Purchases

904000

1360000

Freight-in

24800

—

Net markups

—

80800

Net markdowns

—

56800

Sales

—

1424000

Explanation / Answer

D.1,132,800 and 1,728,800.

goods available for sale at cost:

goods available for sale based on retail:

beginning inventory $204,000 purchases 904,000 freight in 24,800 cost of goods available for sale 1,132,800

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