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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Using the retail method, estimate the value of the ending inventory at cost on September 30 from the following information for Scandinavian Furniture Designs, Inc. Round the cost ratio to the nearest tenth of a percent.

Scandinavian Furniture Designs. Inc.

September 1-September 30

Cost Retail
Beginning Inventory. September 1 $150,000 $450,000
Purchases (September) 90.000 270.000
Net Sales (September) $395,000

To determine

To calculate: The value of the ending inventory at cost on September 30 from the following information for Scandinavian Furniture Designs, Inc. with the help of the retail method and round the cost ratio to the nearest tenth of a percent.

Scandinavian Furniture Designs,Inc.September 1 September 30CostRetailBeginning Inventory, September 1$150,000$450,000Net Purchases(September)90,000270,000Net Sales (September) $395,000

Explanation

Given Information:

The following table contain information of Scandinavian Furniture Designs of September month.

Scandinavian Furniture Designs,Inc.September 1 September 30CostRetailBeginning Inventory, September 1$150,000$450,000Net Purchases(September)90,000270,000Net Sales (September) $395,000

Formula used:

Step 1: Relation between beginning Inventory, Net Purchased and Goods available for sales, is given by:

Goods Available for Sale = Beginning Inventory + Net Purchased

Step 2: The cost ratio is given by:

Cost ratio = Goods available for sale at costGoods available for sale at retail

Step 3: The Ending inventory at retail is given by:

Ending Inventory at retail = Goods available for sale at retailNet sales

Step 4: The Ending inventory at cost is given by:

Ending inventory at cost = Ending inventory at retail × Cost ratio

Calculation:

List the beginning inventory and purchases and calculate the goods available for sale

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