Using the retail method, estimate the value of the ending inventory at cost on May 31 from the following information for Fortune Industries, Inc. Round the cost ratio to the nearest tenth of a percent.
Fortune Industries, Inc. May 1-May 31
Cost | Retail | |
Beginning Inventory, May 1 | $145,600 | $196,560 |
Purchases | 79,000 | 106,650 |
Net Sales $210,800 |
To calculate: The value of the ending inventory at cost on May 31 from the following information for Fortune Industries, Inc. with the help of the retail method and round the cost ratio to the nearest tenth of a percent.
Given Information:
Formula used:
Step 1: The goods available for sale is given by:
Step 2: The cost ratio is given by:
Step 3: The Ending inventory at retail is given by:
Step 4: The Ending inventory at cost is given by:
Calculation:
List the beginning inventory and purchases and calculate the goods available for sale.
Add purchases and beginning inventory to determine goods available for sale at both cost and retail.
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