Compute the cost of ending inventory using the retail method when goods available for sale at cost are $15,000,retail is $25,000,and sales at retail equal $20,000.What will the cost ratio be? What will the ending inventory be?

Question

Quizplus · Accepted Answer

The cost ratio is calculated as $15,000 / $25,000 = 60%. The ending inventory at retail is $25,000 - $20,000 = $5,000. Applying the cost ratio, the ending inventory at cost is $5,000 * 60% = $3,000.

Compute the Cost of Ending Inventory Using the Retail Method