almadan valley varitey store uses the retail inventory method to esitmate ending

Question

almadan valley varitey store uses the retail inventory method to esitmate ending inventory and cost of good sold date for 2016 are as follows

                                                              cost               retail

begining invetory                            12,000                20,000

purchases                                       102600               165,000

frieght in                                          3480                    

purchase retrurns                           4,000                   7,000

net markups                                                               6,000

net markdowns                                                           3,000

normal spoilage                                                         4,200

net sales                                                                    152,000

required

estimate ending inventory and cost of goods sold for 2016, applying the conventional retail method.

Explanation / Answer

Working Notes:

Cost of goods sold = Cost of goods available for sale - cost of ending inventory = purchase + beginning inventory -ending inventory = $12000 + $102080 -$14632 = $99448

Purchases $ 1,02,600.00 Add: Freight in $       3,480.00 $ 1,06,080.00 Less: Purchase return $       4,000.00 Cost of purchase $ 1,02,080.00 Purchase at retail value $ 1,65,000.00 Less: purchase return $       7,000.00 Net purchase at retail $ 1,58,000.00

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