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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
Publisher: Cengage Learning
ISBN: 9781305585447
BuyFind

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
Publisher: Cengage Learning
ISBN: 9781305585447

Solutions

Chapter
Section
Chapter 16.II, Problem 5TIE
Textbook Problem
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Using the retail method, estimate the value of the ending inventory at cost on August 31 from the following information for Ripe ’N Ready Fruit Wholesalers. Inc.

Ripe ’N Ready Fruit Wholesalers, Inc.Financial Highlights August 1-August 31
Cost Retail
Beginning Inventory $600,000 $800,000
Net Purchases (August) 285,000 380,000
Net Sales (August) $744,000

Expert Solution
To determine

To calculate: The value of the ending inventory at cost on August 31 from the following information for Ripe ’N Ready Fruit Wholesaler, Inc., using the retail method.

Ripe 'N Ready Fruit Wholesalers, Inc.Financial HighlightsAugust 1-August 31 CostRetailBeginning Inventory, August 1$600,000$800,000Net Purchases(August)285,000380,000Net Sales  $744,000

Explanation of Solution

Given Information:

The following table contain information of Ripe ‘N Ready Fruit Wholesalers of August month.

Ripe 'N Ready Fruit Wholesalers, Inc.Financial HighlightsAugust 1-August 31 CostRetailBeginning Inventory, August 1$600,000$800,000Net Purchases(August)285,000380,000Net Sales  $744,000

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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Chapter 16 Solutions

Contemporary Mathematics for Business & Consumers
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