Question

Crane uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $378000 ($582000), purchases during the current year at cost (retail) were $1815000 ($3060000), freight-in on these purchases totaled $117000, sales during the current year totaled $2760000, and net markups (markdowns) were $60000 ($96000). What is the ending inventory value at cost

Answer 1

$524,520

Step-by-step explanation:

The computation of the ending inventory at cost is shown below:

Particulars Cost Retail

Beginning Inventory $378,000 $582,000

Purchases $1,815,000 $3,060,000

Freight In $117,000

Net Mark ups $60,000

Total $2,310,000 $3,702,000 (62%)

Net Mark Downs -$96,000

Sales -$2,760,000

Ending Inventory $2,310,000 $846,000

So, at 62%, the ending inventory is

= $846,000 × 62%

= $524,520