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The Toso Company uses the retail inventory method. The following information is available for the year ended December 31, 2018:

Cost Retail
Inventory 1/1/2018 $ 390,000 $ 650,000
Net purchases for the year 1,402,000 1,835,000
Net markups 75,000
Net markdowns 45,000
Net sales 1,845,000

Applying the average cost retail inventory method, Toso's inventory at December 31, 2018, is estimated at:

a. $477,392

b. $469,000

c. 395,159

d. $405,035

Respuesta :

saqib097

Answer:

b. $469,000

Explanation:

Ending inventory at retail:

$670,000 [$650,000 (beginning inventory) + $1,835,000 (net purchases) + $75,000 (net markups) - $45,000 (net markdowns) - $1,845,000 (net sales)]

Cost ratio: 70% [$390,000 (beginning inventory) + $1,402,000 (net purchases)] / [$650,000 (beginning inventory) + $1,835,000 (net purchases) + $75,000 (net markups)].

Ending inventory at cost: $70,000 x 70%

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