Question

question content area a business using the retail method of inventory costing determines that inventory at retail is $456,000. if the ratio of cost to retail price is 68%, what is the amount of inventory to be reported on the financial statements?

Answer 1

To calculate the amount of inventory to be reported on financial statements when using the retail method of inventory costing, multiply the inventory at retail by the cost-to-retail ratio. The inventory cost for the given question is $310,080.

Step-by-step explanation:

If a business using the retail method of inventory costing determines that the inventory at retail is $456,000, and the ratio of cost to retail price is 68%, the amount of inventory to be reported on the financial statements can be calculated using the given ratio. To find the inventory cost, you would multiply the inventory at retail by the cost-to-retail ratio.

Inventory Cost = Inventory at Retail × Cost-to-Retail Ratio

Using the given figures:

Inventory Cost = $456,000 × 0.68

Inventory Cost = $310,080

Therefore, the amount of inventory that should be reported on the financial statements is $310,080.