Compute ending inventory by conventional retail inventory

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Reference no: EM13872438

Purpose: This exercise illustrates two variations of the retail inventory method.

Sales

$ 79,000

Sales returns

1,000

Markups

10,000

Markup cancellations

1,500

Markdowns

9,300

Markdown cancellations

2,800

Freight on purchases

2,400

Purchases (at cost)

48,000

Purchases (at sales price)

88,000

Purchase returns (at cost)

2,000

Purchase returns (at sales price)

3,000

Beginning inventory (at cost)

30,000

Beginning inventory (at sales price)

46,500

It will provide an opportunity to compare and contrast these two approaches. The records of Nancy Klintworth's Baubles report the following data for the month of May.

Instructions

(a) Compute the ending inventory by the conventional retail inventory method.

(b) Compute the ending inventory using the retail method to approximate a LIFO cost figure (assuming stable prices).

Reference no: EM13872438

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