Question

Canon Company uses the conventional retail inventory method. Cost Retail Beginning Inventory $10,233 $22,666 Net Purchases $50,000 $87,977 Freight-In $2,355. What is the ending inventory at retail?

a) $85,100
b) $112,999
c) $165,266
d) $203,322

Answer 1

The ending inventory at retail is the sum of the beginning inventory and net purchases at retail. Freight-in costs do not directly affect the retail value. The closest answer to the ending inventory at retail is $112,999.

Step-by-step explanation:

To calculate the ending inventory at retail using the conventional retail inventory method, we first need to sum up the beginning inventory at retail with the net purchases and the freight-in costs. This will give us the total retail value of goods available for sale.

Using the figures provided:

• Beginning Inventory at Retail: $22,666
• Net Purchases at Retail: $87,977
• Freight-In: This cost is usually added to the cost of goods purchased, so it does not directly affect the ending inventory at retail as it is not denoted as a retail value.

Now we add the beginning inventory and net purchases at retail to get:

$22,666 + $87,977 = $110,643

Since there are no other adjustments provided such as sales, markdowns, or markups, the total retail value of goods available for sale is $110,643. This represents the ending inventory at retail, before subtracting any sales that may have occurred.

Therefore, the closest answer to the ending inventory at retail provided by the options is:

b) $112,999