Question

Dakota Company had net sales (at retail) of $260,000.

At Cost At Retail

Beginning inventory $ 63,800 $ 128,400

Cost of goods purchased 115,060 196,800

The above additional information is available from its records. Use the retail inventory method to estimate Dakota's year-end inventory at cost. (Round cost ratio to the nearest whole percentage.)

Answer 1

$35,860

Step-by-step explanation:

The computation of the ending inventory using the retail inventory method is shown below

Particulars Cost Retail

Opening Inventory(A) $63,800 $128,400

Purchases(B) $115,060 $196,800

Goods available

C=(A-B) $178,860 $325,200

Cost ratio

($178,860 ÷ $325,200 × 100) 55%

Sales at retail (D) $260,000

End, Inventory at Retail $65,200

($325,200 - $260,000)

End, Inventory at Cost $35,860

($65,200 × 55%)