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Expert-verified Found in: Page 474 ### Intermediate Accounting (Kieso)

Book edition 16th
Author(s) Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Pages 1552 pages
ISBN 9781118743201

# (a) Determine the ending inventory under the conventional retail method for the furniture department of Mayron Department Stores from the following data. Cost Retail Inventory, Jan. 1 $149,000$ 283,500 Purchases 1,400,000 2,160,000 Freight-in 70,000 Markups, net 92,000 Markdowns, net 48,000 Sales revenue 2,175,000 (b) If the results of a physical inventory indicated an inventory at retail of $295,000, what inferences would you draw? (a) Ending inventory at cost equals$199,531.25.

(b) Ending inventory at retail is $312,500, whereas, per the physical count, it is$295,000. This indicates that inventory at retail is worth $17,500, and inventory at a cost worth$11,173.75 is not accounted for.

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## Calculation of ending inventory at retail

Ending inventory at retail is calculated as follows:

 Cost Retail Beginning inventory $149000$283500 Purchases 1,400,000 2,160,000 Freight-in 70,000 0 Total 1,619,000 2,443,500 Add: Markups, net 92000 $1619000 2,535,500 Less: Markdowns, net 48000 2,487,500 Less: Sales revenue 2,175000 Ending inventory, at retail$312,500

## Calculation of ratio of cost to selling price

The ratio of cost to selling price is calculated as follows: ## Calculation of ending inventory at cost

The ending inventory at cost is calculated as follows: ## Calculation of Not accounted inventory at retail

Not accounted inventory at retail is calculated as follows: ## Calculation of Not accounted inventory at cost

Not accounted inventory at cost is calculated as follows:  ### Want to see more solutions like these? 