Estimate the cost of goods sold for May using the retail method.
A) $137,400.
B) $150,400.
C) $205,236.
D) $319,600.

Question

Quizplus · Accepted Answer

The cost-to-retail percentage is calculated as the cost of goods available for sale divided by the retail value of goods available for sale. 
Cost of goods available for sale = beginning inventory + purchases = ($69,800 + $165,100) = $234,900 
Retail value of goods available for sale = beginning inventory + purchases + markup = ($90,000 + $220,000 + $20,000) = $330,000 
Cost-to-retail percentage = $234,900 / $330,000 = 0.7127 (rounded)

To calculate the estimated cost of goods sold for May, we need to multiply the retail value of sales by the cost-to-retail percentage: 
Estimated cost of goods sold = $286,800 * 0.7127 = $204,714 (rounded)

Therefore, the closest answer choice to the estimated cost of goods sold using the retail method is C) $205,236.

Estimate the Cost of Goods Sold for May Using the Retail