American Lumber has the following company information for October: goods available for sale at cost are $24,000, retail is $36,500, and sales at retail equal $28,500. Bert has a normal gross profit of 20%. The cost of estimated ending inventory under the retail method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The cost of estimated ending inventory under the retail method is $6,246.The cost of estimated ending inventory under the retail method is calculated as follows:Cost of estimated ending inventory = (Retail value of ending inventory / (1 + Gross profit rate)) x Cost of goods available for saleRetail value of ending inventory = Retail value of goods available for sale - Sales at retailRetail value of ending inventory = $36,500 - $28,500Retail value of ending inventory = $8,000Cost of estimated ending inventory = ($8,000 / (1 + 0.20)) x $24,000Cost of estimated ending inventory = $6,246

American Lumber Has the Following Company Information for October: Goods