Question

Artemis Inc. began the year with $260,000 inventory at cost which had a retail value of $396,000. During the year purchases were made at a cost of $1,370,000 which would be $2,200,000 retail and the freight-in on these purchases totaled $86,000. Sales during the current year totaled $2,000,000 with net markups of $48,000 and markdowns of $72,000.

What is the ending inventory value at cost under the conventional retail method?
a. $371,228.
b. $378,092.
c. $386,804.
d. $572,000.

Answer 1

option (d) $572,000

Step-by-step explanation:

Data provided in the question:

Beginning inventory = $260,000

Retail value of the inventory = $396,000

Purchase of inventory = $1,370,000

Retail of value of the inventory purchased = $2,200,000

Freight-in on the purchases = $86,000

Total sales = $2,000,000

Net markups = $48,000

Markdowns = $72,000

Now,

Total retail value of inventory

= Retail value of the inventory + Retail of value of the inventory purchased + Net markups

= $396,000 + $2,200,000 + $48,000

= $2,644,000

Ending inventory value

= Total retail value of inventory - Total sales - Markdowns

= $2,644,000 - $2,000,000 - $72,000

= $572,000

Hence,

the correct answer is option (d) $572,000