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The records of Ellen's Boutique report the following data for the month of April. Sales...

Question:

The records of Ellen's Boutique report the following data for the month of April.

Sales revenue $97,700 Purchases (at cost) $57,300
Sales returns 3,000 Purchases (at sales price) 88,700
Markups 11,100 Purchase returns (at cost) 3,000
Markup cancellations 1,300 Purchase returns (at sales price) 4,000
Markdowns 9,400 Beginning inventory (at cost) 34,808
Markdown cancellations 3,800 Beginning inventory (at sales price) 50,200
Freight on purchases 3,500

Compute the ending inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using conventional retail inventory method $

Conventional Retail Inventory Method:

,Conventional retail inventory method values the inventory with the help of cost to retail price ratio.This method focuses on the relation between the cost of merchandise and its retail price. Unlike in cost method, the markups and markdowns are considered while computing the retail cost of goods available for sale.

Answer and Explanation:

The ending inventory under the conventional retail inventory method is computed below.

ParticularsCostRetail
Beginning Inventory$34,808$50,200
Purch...

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Calculate Ending Inventory: Formula & Explanation

from Financial Accounting: Help and Review

Chapter 1 / Lesson 6
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