LeMay Department Store uses the retail inventory method to estimate ending inven

Question

LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March 2013: Cost Retail Beginning inventory $ 56,000 $ 76,000 Purchases 223,000 416,000 Freight-in 12,352 Purchase returns 7,500 10,000 Net markups 7,400 Net markdowns 5,100 Normal breakage 10,000 Net sales 296,000 Employee discounts 1,800 Sales are recorded net of employee discounts. Required: 1. Compute estimated ending inventory and cost of goods sold for March applying the conventional retail method (average, LCM). (Negative amounts should be indicated by a minus sign.)

Explanation / Answer

LeMay Department Store All Amounts in $ Cost of Goods Sold and Ending Inventory Month of March 2013 Particulars Cost Retail Price Opening Inventory 56000 76000 Purchases 223000 416000 Purchase Returns -7500 -10000 271500 482000 56.3% Freight-in 12352 Net Markups 7400 Net Markdowns -5100 Normal Breakages -10000 Sales -166730 56.3% of Sale Value of $ 296,000 Closing Inventory 109422 Cost of Goods Sold 162078 Sales + Normal Breakages + Markdowns + Markups + Freight

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