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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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The retail inventory method would include which of the following in the calculation of the goods available for sale at both cost and retail?

  1. a. freight-in
  2. b. purchases returns
  3. c. markups
  4. d. markdowns

To determine

Find out the correct option that would be included in the calculation of the goods available for sale, at both cost and retail, under the retail inventory method.

Explanation

Retail inventory method: It takes into account all the retail amounts that is, the current selling prices. Under this method, the goods available for sale, at retail is deducted from the sales, at retail to determine the ending inventory, at retail.

Retail Inventory Method Format
DetailsCost ($)Retail ($)
Beginning inventoryXXXXXX
Add:  Net purchaseXXXXXX
           Freight-inXXX 
           Net markups XXX
Less: Purchase Returns (XXX)...

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