A retail store had goods available for sale during the period of $250,000 at retail and $100,000 at cost.It has ending inventory of $28,500 at retail.What is the estimated cost of goods sold?

Question

Quizplus · Accepted Answer

To find estimated cost of goods sold, we need to use the retail inventory method formula:
Beginning inventory + purchases - ending inventory = cost of goods sold at retail
$250,000 (Retail) - $28,500 (Retail) = $221,500 (Retail Inventory)
Cost-to-retail ratio = Cost / Retail = $100,000 / $250,000 = 0.4
Cost of goods sold at retail = $221,500 x 0.4 = $88,600
Therefore, the estimated cost of goods sold is $88,600. Answer choice C is correct.

A Retail Store Had Goods Available for Sale During the Period