Question

Ivanhoe Pet supply uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $786800 ($970700), purchases during the current year at cost (retail) were $3005800 ($3958300), freight-in on these purchases totaled $181700, sales during the current year totaled $3856000, and net markups (markdowns) were $5000 ($278900). What is the ending inventory value at cost

Answer 1

$643,276

Step-by-step explanation:

Calculation to determine the ending inventory value at cost

First step is to calculate the beginning inventory

Ending inventory value at cost=($970700 + $3958300 + $5000 - $3856000 - $278900)*[($786800 + $3005800 + $181700) ÷ ($970700 + $3958300 + $5000)]

Ending inventory value at cost=

= $799,100*(3974300÷4934000)

Ending inventory value at cost=$799,100 × 0.805

Ending inventory value at cost = $643,276

Therefore the ending inventory value at cost will be $643,276