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
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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from Financial Accounting: Help and ReviewChapter 1 / Lesson 6