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Chapter 9: Question 10BE (page 475)

Boyne Inc. had beginning inventory of \(12,000 at cost and \)20,000 at retail. Net purchases were \(120,000 at cost and \)170,000 at retail. Net markups were \(10,000, net markdowns were \)7,000, and sales revenue was $147,000. Compute ending inventory at cost using the conventional retail method

Short Answer

Expert verified

The ending inventory at cost equals $33,360

Step by step solution

01

Inventory value at retail is calculated as follows:

Cost

Retail

Beginning inventory

$12,000

$20,000

Add: Net Purchases

120,000

170,000

Add: Net Markups

________

10,000

Totals

$132,000

$200,000

Less: Net Markdowns

7,000

Less: Sales

147,000

Ending inventory at retail

$46,000

02

The cost-to-retail ratio is calculated as follows:

Costtoretail=InventoryatcostInventoryatretail×100=$132,000$200,000×100=66%

03

The ending inventory at cost is calculated as follows:

Endinginventoryatcost=Endinginventoryatretail×Costtoretailratio=$46,000×66%=$30,360

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Most popular questions from this chapter

Kemper Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2018 at a cost of \(1,000,000. At December 31, 2017, the raw materials to be purchased have a market value of \)950,000. Prepare any necessary December 31, 2017, entry.

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