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Blossom Inc. uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $380500 ($581000), purchases during the current year at cost (retail) were $3148000 ($4933600), freight-in on these purchases totaled $146500, sales during the current year totaled $4406000, and net markups were $401000. What is the ending inventory value at cost

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abiolataiwo2015

Answer:

$ 937,885

Explanation:

Particulars Cost $ Retail $

Beginning inventory$380,500 $581,000

Gross Purchases$3,148,000 $4,933,600

freight in $ 146,500 $ -

Net Markups $ - $401,000

Goods available for sale$3,675,000 $5,915,600

Cost-to-Retail percentage ( $3,675,000 / $5,915,600) 62.128%

Less:

Gross Sales $- $ (4,406,000)

Estimated ending inventory at retail $1,509,600

Estimated ending inventory at cost($ 1,509,600 * 62.128 %) $ 937,885

Therefore the ending inventory cost at value is $ 937,885

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