Bob's Clothing Shop's inventory at cost was $30,000 on January 1. Its retail value is $42,000. During the year, Bob's Clothing Shop purchased additional merchandise at a cost of $196,000 with a retail value of $368,000. The net sales at retail for the year were $310,000. Calculate Bob's inventory at cost by the retail method. Round the cost ratio to the nearest whole percent.

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Quizplus · Accepted Answer

Retail = ($42,000 + $368,000)= $410,000; Cost = ($30,000 + $196,000)= $226,000; Cost Ratio = $226,000 / $410,000 = .55 = 55%; $410,000 - $310,000 = $100,000; $100,000 × .55 = $55,000.

Bob's Clothing Shop's Inventory at Cost Was $30,000 on January