A company reports the following information regarding its inventory. Beginning inventory: cost is $80,000; retail is $130,000
Net purchases: cost is $65,000; retail is $120,000
Sales at retail: $145,000
The year-end inventory shows $105,000 worth of merchandise available at retail prices.What is the cost of the ending inventory calculated using the retail inventory method?
A)$135,000.
B)$73,125.
C)$60,900.
D)$72,900.
E)$105,000.

Question

Quizplus · Accepted Answer

The cost-to-retail percentage is calculated as (Beginning Inventory Cost + Net Purchases Cost) / (Beginning Inventory Retail + Net Purchases Retail) = ($80,000 + $65,000) / ($130,000 + $120,000) = $145,000 / $250,000 = 58%. The ending inventory at retail is $105,000, so the cost of the ending inventory is $105,000 * 58% = $60,900.

A Company Reports the Following Information Regarding Its Inventory