Question

Presented below is information related to Ricky Henderson Company.

Cost Retail
Beginning inventory $ 282,140 $ 291,600
Purchases 1,425,000 2,144,000
Markups 92,300
Markup cancellations 17,400
Markdowns 37,900
Markdown cancellations 6,100
Sales revenue 2,346,000
Compute the inventory by the conventional retail inventory method.

Answer 1

Answer:the inventory by the conventional retail inventory method=the cost of Ending inventory becomes == $90,236.

Step-by-step explanation:

Inventory computed for Ricky Henderson Company

Using the conventional retail inventory method, we have

Cost Retail

Beginning of Inventory $ 282,140 $ 291,600

Purchases 1,425,000 2,144,000

Total 1,707,140 2,435,600

Add:

Net Markups 74,900

(Markups -Markup 92,300 - 17,400)

cancellations)

Total 1,707,140 2510500

Less:

Net Markdown 31,800

(Markdowns -Markdown (37,900 - 6,100)

cancellations)

Sales price of goods 2,478,000

Sales revenue 2,346,000

The retail ending 132,700

(Sales price of goods-Sales revenue)

Therefore,

The retail cost ratio is = 1,707,140 /2,510,500=0.68= 68%

Hence, the cost of Ending inventory becomes = 132,700 x 68%

= $90,236.