Question

(8) Dicer uses the conventional retail method to determine its ending inventory at cost. d. $100,000. Assume the beginning inventory at cost (retail) were $390,000 (5594,000), purchases during the current year at cost (retail) were $2,055,000 ($3,300,000), freight-in on these purchases totaled $129,000, sales during the current year totaled $3,000,000, and net markups (markdowns) were $72,000 ($108,000). What is the ending inventory value at cost? a. $556,842. b. $567,138. c. $580,206. d. $858,000. (9) Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year: Cost Retail Beginning inventory $ 30,000 $ 45,000 Purchases 190,000 260,000 Freight-in 2,500 Net markups 8,500 Net markdowns 10,000 Employee discounts 1,000 Sales revenue 205,000 If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost-to-retail ratio? a. $222,500 - $305,000 $222,500 - $313,500 c. $220,000 - $315,000 d. $222,500 + $303,500 (10) Fry Corporation's computation of cost of goods sold is: Beginning inventory $ 60,000 Add: Cost of goods purchased 530,000 Cost of goods available for sale 590,000 Ending inventory 90,000 Cost of goods sold $500,000 The average days to sell inventory for Fry are a. 46.2 days. c. 54.5 days b. 51.4 days. Conventional Calulare raho

Can someone show the steps on how to do these problems. Those are the real answers, I just don't understand the process, thank you

Answer 1

9th Answer

The cost/retail ratio makes up one of the main components used to calculate the retail inventory method. Two methods exist for calculating the cost/retail ratio. The first method, called the conventional retail method includes markups but excludes markdowns. This method results in a lower ending inventory value. The second method, simply called the retail method, uses both markups and markdowns to calculate the ratio. This method results in a higher-ending inventory value.

As per stated above,

the cost to retail ratio=(Cost of opening inventory+ cost of purchase+cost of freight inward)/(Retail price of opening inventory+Purchase+ Markup)

=(30000+190000+2500)/(45000+260000+8500)

=222500/313500

10.Answer

Average days to sell inventory to sell inventory=number of days in a year (365 or 360 days)

inventory turnover ratio

Inventory Turnover ratio= cost of goods sold for a year divided by average inventory during the same 12 months.

average inventory during 12 months.=opening + closing Inventory

2

there fore average inventory during12 months=(90000+60000)/2=75000

Inventory Turnover ratio=500000/75000=6.67

Average days to sell inventory to sell inventory=365/6.67=54.5