$250,900 943,2061,469,100 Purchases Purchase retums Purchase discounts Gross sal

Question

$250,900 943,2061,469,100 Purchases Purchase retums Purchase discounts Gross sales revenue Sales retums Markups Markup cancellations 61,200 18,200 1,414,000 99,200 120,500 39,200 44,900 Freight-in Employee discounts granted Loss from breakage (normal) Assuming that Whispering 42,400 Inc. uses the convertional retail inventory method, compute the cost of its ending inventory at December 31, 2018. (Round ratios for to o decimal places, e-9 78% and final answer to 0 decimal places, eg. 28,987.) Ending inventory using the conventional retail inventory method Click if you would like to Show Work for this question: Question Attempts: 3 of 15 used SAVE FOR LATER

Explanation / Answer

Ending inventory using conventional retail inventory method: $318990

Under the conventional retail inventory method, the cost to retail ratio is computed after markups and markup cancellations but before markdowns and markdown cancellations.

Cost to retail ratio = $1157106/$1866300 = 62%

Ending inventory = Ending inventory at Retail x Cost to retail ratio = $514500 x 62% = $318990

Cost Retail Beginning inventory 250900 396700 Purchases 943206 1469100 Freight-in 42400 Purchase returns -61200 -80800 Purchase discounts -18200 Merchandise available for sale 1157106 1785000 Add: Markups 120500 Less: Markup cancellations -39200 Net markups 81300 1157106 1866300 Deduct: Markdowns 44900 Less: Markdown cancellations -20400 Net markdowns 24500 Sales 1414000 Less: Sales returns -99200 1314800 Employee discounts 7800 Normal loss from breakage 4700 Ending inventory at retail 514500

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