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 2016: Sales are recorded net of employee discounts. Compute estimated ending inventory and cost of goods sold for March applying the conventional retail method. Recompute the cost-to-retail percentage using the average cost method. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34%.))

Explanation / Answer

1)

Estimated Ending Inventory at Cost = $176,200 * 59.65% = $105,103

Estimatedcost of goods sold = $291,578 - $105,103 = $186,475

2).Cost to retail percentage = $291,578 / $488,800 = 0.5965 or 59.65%

Cost Retail Cost to ratail Ratio Beginning Inventory $59,000 $79,000 Plus : Purchase $226,000 $419,000 Fright In $15,578 Less : Purchase return (9,000) (11,500) Plus : Net Mark up $7,700 Total $494,200 Less : Net mark downs ($5,400) Goods available for sale $291,578 $488,800 Cost to retail per cent $291,578 $488,800 59.65% Less : Normal breakage (11,500) Sales : Net sales (299,000) Employee discount (2,100) Estimated ending inventory at retail $176,200 Estimatedending inventory at cost ($105,103) Estimatedcost of goods sold $186,475

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

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