Don's Dairy had sales of $275,000 in the month of March. Use the retail method to estimate the value of the inventory as of March 31 given the following financial information: (Round cost ratio to four decimal places) $\begin{array}{c}
\begin{array}{lll}
\text { { March } 1 \text { to March } 31 }\
\text { Beginning Inventory}\
\text { Net Purchases (March )}\
\text { Goods Available for Sale}\
\end{array}
\begin{array}{lll}
\text { COST } & \text { RETAIL } \
\hline \$ 220,380 & \$ 291,800 \
183,771 & 272,200 \
\hline \$ 462,080 &
\end{array}
\end{array}$

Question

Quizplus · Accepted Answer

The cost ratio is calculated as the cost of goods available for sale divided by the retail value of goods available for sale: $ \frac{462,080}{564,000} = 0.8191 $. The estimated ending inventory at retail is the goods available for sale at retail minus sales: $ 564,000 - 275,000 = 289,000 $. The estimated ending inventory at cost is the ending inventory at retail multiplied by the cost ratio: $ 289,000 \times 0.8191 = 236,777.70 $.

Don's Dairy Had Sales of $275,000 in the Month of March