Question

In 2017, Dakota Company had net sales (at retail) of $131,000.

	At Cost				At Retail
Beginning inventory		$	32,000			$	64,300
Cost of goods purchased			59,168				98,500

The above additional information is available from its records at the end of 2017. Use the retail inventory method to estimate Dakota's 2017 ending inventory at cost. (Round cost ratio to the nearest whole percentage.)
  

Answer 1

Dakota's 2017 ending inventory at cost under the retail inventory method is calculated as follows:

	At Cost($)	At Retail ($)	Cost to Retail Ratio
Begining inventory	32,000	64,300
Cost of goods purchased	59,168	98,500
Cost of goods available for sale	91,168	162,800	56%
Net Sales at retail		(131,000)
Ending Inventory	$17,808	$31,800
	($31,800 * 56%)

Cost to Retail Ratio = $91,168 / $162,800*100

= 56%

Ending Inventory cost = ($31,800 * 56%)

   = $17,808

Dakota's 2017 ending inventory at cost under the retail inventory method is $17,808