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Compute the ending inventory at retail

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Reference no: EM131577907

Problem - Presented below is information related to Sarasota Company.

Cost

Retail

Beginning inventory

$ 55,350

$105,100

Purchases (net)

134,190

199,600

Net markups

9,339

Net markdowns

25,842

Sales revenue

192,900

a. Compute the ending inventory at retail.

b. Compute a cost-to-retail percentage under the following conditions.

(1) Excluding both markups and markdowns.

(2) Excluding markups but including markdowns.

(3) Excluding markdowns but including markups.

(4) Including both markdowns and markups.

c. Which of the methods in (b) above does the following?

(1) Provides the most conservative estimate of ending inventory.

(2) Provides an approximation of lower-of-cost-or-market.

(3) Is used in the conventional retail method.

d. Compute ending inventory at lower-of-cost-or-market.

e. Compute cost of goods sold based on (d).

f. Compute gross margin based on (d).

Reference no: EM131577907

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