Answer: $293,280
Explanation:
Solving this requires that we find the closing inventory at retail value and subtract it from the inventory cost.
Ending inventory at retail = Retail begining inventory + net markups - net markdowns - sales
= 580,500 +32,000 - 22,000 - 542,000
= $48,500
$48,500 is the ending inventory estimate at retail.
The Cost to Retail percentage is needed to equate the figure above to cost.
At Cost the beginning inventory and purchases was $318,500
At Retail the beginning inventory and purchases was
580,500 + 32,000 = $612,500
Equating them would be,
= 318,500/612,500
= 52%
52% is the ratio therefore 52% of Retail ending inventory is Cost ending inventory.
= 52% * 48,500
= $25,220
Cost of goods sold is Opening inventory and purchases - closing Inventory,
= 318,500 - 25,220
= $293,280
$293,280 should be reported as cost of goods sold for the year.
Answer:
$293,280
Explanation:
Retail Inventory method is used to estimate the value of inventory using retail price of the unit of inventory.
As per given data
Cost Retail
Beginning inventory and purchases $318,500 $580,500
+ Net markups $32,000
- Net markdowns $22,000
= Goods Available for sale $318,500 $590,500
- Net sales $542,000
= Estimated Ending Inventory
At retail price $48,500
-At Cost $25,220
(48,500x318500/(580,500+32000)
Total Cost of Goods Sold $293,280
