Use for 8-10 ROUND ALL PERCENTAGES TO TWO DECIMALS EX: 43.23% The following data

Question

Use for 8-10 ROUND ALL PERCENTAGES TO TWO DECIMALS EX: 43.23% The following data concerning the retail inventory method are taken from the financial records of Blake Company. Cost Retail Beginning inventory $132,000 $ 220,000 Purchases 362,500 550,000 Freight-in 16,000 — Net markups — 45,000 Net markdowns — 16,000 Sales — 625,000 8. What is the ending inventory at retail? 9. If the ending inventory is to be valued at approximately the conventional retail inventory method, the calculation of the cost to retail ratio should be based on goods available for sale at: (a) cost(dollar amount) and (b) retail(dollar amount) 10. What is the cost of ending inventory using the FIFO cost method?

Explanation / Answer

8)

9)cost to retail ratio =cost /retail

                      = 510500/815000

                      = .6264 or 62.64%

10)cost of ending inventory using the FIFO cost method : inventory at retail * cost to retail ratio

                     = 174000 *.6264

                    = $ 108993.6 [rounded to 108,994]

cost Retail Beginning inventory 132000 220000 purchase 362500 550000 Freight in 16000 0 markup 45000 cost of goods available for sale including markup 510500 815000 Markdown (16000) Less:sales (625000) Ending inventory at retail 174000

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