Question

Billingsly Products uses the conventional retail method to estimate its ending inventories. The following data has been summarized for the year 2021 Cost $ 53,000 322,360 Inventory, January 1 Purchases Net markups Net markdowns Net sales Retail $ 78,000 466,000 8,000 16,700 392,000 Required: Estimate the ending inventory as of December 31, 2021. Estimated ending inventory at retail Estimated ending inventory at cost

Answer 1

Estimated ending inventory at retail = $143,300

Estimated ending inventory at cost = $97,444

Explanation

Computation of the ending inventory
by the conventional retail inventory method.
	Cost ($)	Retail ($)
Beginning Inventory	53,000.00	78,000.00
Net Purchases	322,360.00	466,000.00
Totals	375,360.00	544,000.00
Add: Net markups	-	8,000.00
	375,360.00	552,000.00
Deduct: Net markdowns	-	16,700.00
Sales price of goods available	375,360.00	535,300.00
Deduct: Net sales	-	392,000.00
Ending inventory	375,360.00	143,300.00
Cost-to-retail ratio = 375,360 / 552,000 = 68%
Ending inventory at cost =143,300 * 68% = $97,444