Concord Inc. uses the retail inventory method to estimate ending inventory for i

Question

Concord Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2018 Inventory, October 1, 2018 $52,800 77,800 At cost At retail Purchases (exclusive of freight and returns) 240,363 421,300 16,300 At cost At retail Freight-in Purchase returns 5,500 7,900 9,100 2,000 3,600 9,900 397,000 At cost At retail Markups Markup cancellations Markdowns (net) Normal spoilage and breakage Sales revenue (a) Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-or-market inventory for October 31, 2018. (Round ratios for computational purposes to 0 decimal places, e.g 7896 and final answer to 0 decimal places, eg. 28,987.) Ending inventory at lower-of-cost-or-market

Explanation / Answer

ending inventory at lower-of-cost or market = 52680

cost retail beginning inventory 52800 77800 purchases 240363 421300 freight in 16300 purchase returns -5500 -7900 mark ups , net 7100 (9100-2000) current year additons 251163 420500 goods available for sale 303963 498300 mark downs, net -3600 normal spoilage -9900 sales -397000 ending inventory at retail 87800 cost to retail ratio 60% (251163/420500) ending inventory at cost = ending inventory at retail * cost to retail ratio = 87800*60% = 52680

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