Exercise 9-14 Conventional retail method [LO9-4] Campbell Corporation uses the r

Question

Exercise 9-14 Conventional retail method [LO9-4] Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2018 Cost Retail Merchandise inventory, January 1, 2018 Purchases Freight-in Net markups Net markdowns Net sales $300,000 $291,000 581,000 928, 000 19,000 31,000 5,000 910,000 Required Determine the December 31, 2018, inventory by applying the conventional retail method. st-to-Retail Cost Retail Ratio 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 300,000 291,000 Plus : Purchases 581,000 928,000 Freight-in 19,000 Net markups 31,000 900,000 1,250,000 0.72 (900,000/1,250,000) Less : Net markdowns (5,000) Goods available for sale 1,245,000 Cost-to-retail percentage 1.39 Less : Net sales (910,000) Estimated ending inventory at retail 335,000 Estimated ending inventory at cost 241,200 (335,000*72%)

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