3 Campbell Corporation uses the retail method to value its inventory. The follow

ID: 2567462 • Letter: 3

Question

3 Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2016 Retail 2.5 points Cost Merchandise inventory $230,000 $284,000 January 1, 2016 Purchases Freight-in Net markups Net markdowns Net sales 584,000 872,000 12,000 24,000 4,400 840,000 Hint Print Required Determine the December 31, 2016, inventory that approximates average cost, lower of cost and net realizable value Reterences Cost-to-Retail Ratio Cost Retail Beginning inventory Plus: Purchases Freight-in Net markups Less: Net markdowns Goods available for sale Cost-to-retail percentage Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost

Explanation / Answer

Cost

Retail

Cost-to-Retail Ratio

Beginning Inventory

$ 230,000

$ 284,000

Plus:Purchases

$ 584,000

$ 872,000

Freight -in

$ 12,000

Net Markups

$ 24,000

$ 826,000

$ 1,180,000

Less: Net markdowns

$ (4,400)

Goods available for sale

$ 1,175,600

Cost to retail percentage

70.00%

Less: Net Sales

$ (840,000)

Estimated ending inventory at retail

$ 335,600

Estimated ending inventory at Cost

$ 234,920