Reference no: EM132903349

The Ryan Merchandising Co. uses The Retail Method. Information relating to the computation of the inventory on December 31,2021 is as follows:

                                                   Cost               Retail

Inventory, January 1             ?250,000       ?375,000
Purchases                           1,325,000     1,750,000
Net markups 200,000
Net markdowns 75,000
Sales 1,500,000
Estimated normal shoplifting losses 50,000

Problem 1: The company estimates that normal shrinkage is 5% of sales. What is the cost of goods sold at December 31,2021 using the retail inventory method and the average method of estimation?

a. ?1,150,000
b. ?1,137,500
c. ?1,050,000
d. ?950,000