The following information is available for the past month for a retail store: $$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 102,000 \
\hline \text { Markups } & \$ 10,000 \
\hline \text { Markdowns } & \$ 8,000 \
\hline \text { Purchases (at cost) } & \$ 38,800 \
\hline \text { Purchases (at retail) } & \$ 107,000 \
\hline \text { Beginning inventory (at cost) } & \$ 30,000 \
\hline \text { Beginning inventory (at retail) } & \$ 46,000 \
\hline
\end{array}$$
What is the ending inventory at cost using the basic retail method? (Round cost-to-retail ratios to four decimal places.)
A) $23,527
B) $29,473
C) $53,000
D) $16,000

Question

The following information is available for the past month for a retail store: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 102,000 \
\hline \text { Markups } & \$ 10,000 \
\hline \text { Markdowns } & \$ 8,000 \
\hline \text { Purchases (at cost) } & \$ 38,800 \
\hline \text { Purchases (at retail) } & \$ 107,000 \
\hline \text { Beginning inventory (at cost) } & \$ 30,000 \
\hline \text { Beginning inventory (at retail) } & \$ 46,000 \
\hline
\end{array}$$
 What is the ending inventory at cost using the basic retail method? (Round cost-to-retail ratios to four decimal places.)
A) $23,527
B) $29,473
C) $53,000
D) $16,000

Quizplus · Accepted Answer

The cost-to-retail ratio is calculated as (Beginning Inventory at Cost + Purchases at Cost) / (Beginning Inventory at Retail + Purchases at Retail + Markups - Markdowns). The ending inventory at retail is calculated as Beginning Inventory at Retail + Purchases at Retail + Markups - Markdowns - Sales. The ending inventory at cost is then found by multiplying the ending inventory at retail by the cost-to-retail ratio.

The Following Information Is Available for the Past Month for a Retail