In preparing a retail method of accounting worksheet,your accountant has provided you with the following data: January 1,2017 - December 31,2017
At Cost At Retail
Beginning inventory $ 60,000 $100,000
Net purchases 350,000 550,000
Additional markups ----- 27,000
Transportation charges 3,500 -----
What is your correct cost complement?

Question

Quizplus · Accepted Answer

The cost complement is calculated by dividing the total cost by the total retail value. Here, the total cost is $60,000 (beginning inventory) + $350,000 (net purchases) + $3,500 (transportation charges) = $413,500. The total retail value is $100,000 (beginning inventory) + $550,000 (net purchases) + $27,000 (additional markups) = $677,000. Therefore, the cost complement is $413,500 / $677,000 = 0.61.

In Preparing a Retail Method of Accounting Worksheet,your Accountant Has