Judy Company uses the retail inventory method to approximate its ending inventory. The following information is available for the current year: Cost Retail Beginning inventory 650,000 1,200,000 Purchases 9,000,000 14,700,000 Freight in 200,000 Purchase returns 300,000 500,000 Purchase allowance 150,000 Departmental transfer in 200,000 300,000 Net markups 300,000 Net markdowns 1,000,000 Sales 11,500,000 Sales discounts 100,000 Employee discounts 500,000 Questions: What should be reported as the estimated cost of ending inventory using the lower of average cost or market? What should be reported as estimated cost of ending inventory using the average cost approach on applying retail inventory?
Judy Company uses the retail inventory method to approximate its ending inventory. The following
information is available for the current year:
Cost Retail
Beginning inventory 650,000 1,200,000
Purchases 9,000,000 14,700,000
Freight in 200,000
Purchase returns 300,000 500,000
Purchase allowance 150,000
Departmental transfer in 200,000 300,000
Net markups 300,000
Net markdowns 1,000,000
Sales 11,500,000
Sales discounts 100,000
Employee discounts 500,000
Questions:
- What should be reported as the estimated cost of ending inventory using the lower of average cost
or market? - What should be reported as estimated cost of ending inventory using the average cost approach on
applying retail inventory?
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