Use the following information for questions 114 through 118.
The following data concerning the retail inventory method are taken from the financial records of Welch Company.
-If the ending inventory is to be valued at approximately the lower of cost or market, the calculation of the cost-to-retail ratio should be based on goods available for sale at (1) cost and (2) retail, respectively of
A) $837,000 and $1,230,000.
B) $837,000 and $1,188,000.
C) $837,000 and $1,170,000.
D) $819,000 and $1,170,000.

Question

Use the following information for questions 114 through 118.
The following data concerning the retail inventory method are taken from the financial records of Welch Company. 
-If the ending inventory is to be valued at approximately the lower of cost or market, the calculation of the cost-to-retail ratio should be based on goods available for sale at (1) cost and (2) retail, respectively of
A) $837,000 and $1,230,000. 
B) $837,000 and $1,188,000. 
C) $837,000 and $1,170,000. 
D) $819,000 and $1,170,000.

Quizplus · Accepted Answer

The cost-to-retail ratio is calculated based on the goods available for sale at both cost and retail prices. The correct figures for this calculation are $837,000 at cost and $1,230,000 at retail, as indicated in option A. This approach ensures that the ending inventory is valued at the lower of cost or market by comparing the cost of goods available for sale to their selling prices.

Use the Following Information for Questions 114 Through 118