The records for the Clothing Department of Sharapova?s Discount Store are summarized below for...

Question:

The records for the Clothing Department of Sharapova's Discount Store are summarized below for the month of January.

Inventory, January 1: at retail $24,700; at cost $17,000

Purchases in January: at retail $134,900; at cost $89,932

Freight-in: $9,100

Purchase returns: at retail $3,000; at cost $2,300

Transfers in from suburban branch: at retail $12,900; at cost $6,900

Net markups: $7,900

Net markdowns: $4,000

Inventory losses due to normal breakage, etc.: at retail $500

Sales revenue at retail: $94,600

Sales returns: $2,400

(a) Compute the inventory for this department as of January 31 at retail prices. (Round ratios to 0 decimal places and final answer to 0 decimal places)

(b) Compute the ending inventory using lower-of-average-cost-or-market. (Round ratios to 0 decimal places and final answer to 0 decimal places)

Conventional Retail Method

The difference between the conventional method and the other retail method is that the net markdown is excluded in computing for the cost of goods available for sale. The retail method is used to determine an estimate of the cost of ending inventory.

Answer and Explanation:

Let us construct a table to identify the cost of goods available for sale at cost, cost of goods available for sale at retail and the ending inventory...

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Calculate Ending Inventory: Formula & Explanation

from Financial Accounting: Help and Review

Chapter 1 / Lesson 6
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