Turturro Department Store utilizes the retail inventory method to estimate its inventories.It calculated its cost to retail ratio during the period at 75%.Goods available for sale at retail amounted to $600,000 and goods were sold during the period for $420,000.The estimated cost of the ending inventory is

Question

Quizplus · Accepted Answer

The estimated cost of the ending inventory is calculated by subtracting the cost of goods sold (COGS) from the goods available for sale at cost. First, calculate the COGS at retail, which is the goods sold during the period ($420,000). Then, apply the cost to retail ratio (75%) to find the COGS at cost: $420,000 * 75% = $315,000. Subtract this from the goods available for sale at cost ($600,000 * 75% = $450,000) to get the estimated cost of the ending inventory: $450,000 - $315,000 = $135,000.

Turturro Department Store Utilizes the Retail Inventory Method to Estimate