Question

Warren Company's records reveal the following information regarding its inventory: Beginning inventory was $100,000 at cost and 160,000 at retail. Purchases during the year were $300,000 at cost and $500,000 at retail. Net markups were $10,000 and net markdowns, $20,000. Assuming the retail inventory method is used to approximate average costs, what is the amount of goods available for sale at retail?

Answer 1

Amount of goods available for sale at retail = $650,000

Step-by-step explanation:

The amount of goods available for sale at retail can be calculated by the following equation:

Amount of goods available for sale at retail

= Beginning Inventory at retail + Purchasing during the year at retail + Net markups - Net markdowns

As given:

+) Beginning Inventory at retail = $160,000

+) Purchasing during the year at retail = $500,000

+) Net markups = $10,000

+) Net markdowns = $20,000

=> Amount of goods available for sale at retail = 160,000 + 500,000 + 10,000- 20,000 = $650,000