The following information is available for the past year for a retail store: $$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 121,000 \
\hline \text { Sales Returns } & \$ 1,000 \
\hline \text { Markups } & \$ 11,000 \
\hline \text { Markup cancellations } & \$ 1,000 \
\hline \text { Markdowns } & \$ 9,000 \
\hline \text { Purchases (at cost) } & \$ 40,000 \
\hline \text { Purchases (at retail) } & \$ 90,000 \
\hline \text { Beginning inventory (at cost) } & \$ 32,000 \
\hline \text { Beginning inventory (at retail) } & \$ 42,000 \
\hline
\end{array}$$
What is the cost-to-retail ratio to estimate the cost of ending inventory using the conventional retail method? (Round cost-to-retail ratios to four decimal places.)
A) 50.7%
B) 76.19%
C) 54.55%
D) 59.02%

Question

The following information is available for the past year for a retail store: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 121,000 \
\hline \text { Sales Returns } & \$ 1,000 \
\hline \text { Markups } & \$ 11,000 \
\hline \text { Markup cancellations } & \$ 1,000 \
\hline \text { Markdowns } & \$ 9,000 \
\hline \text { Purchases (at cost) } & \$ 40,000 \
\hline \text { Purchases (at retail) } & \$ 90,000 \
\hline \text { Beginning inventory (at cost) } & \$ 32,000 \
\hline \text { Beginning inventory (at retail) } & \$ 42,000 \
\hline
\end{array}$$ 
What is the cost-to-retail ratio to estimate the cost of ending inventory using the conventional retail method? (Round cost-to-retail ratios to four decimal places.)
A) 50.7%
B) 76.19%
C) 54.55%
D) 59.02%

Quizplus · Accepted Answer

The cost-to-retail ratio is calculated by dividing the cost of goods available for sale by the retail value of goods available for sale. The cost of goods available for sale is the sum of the beginning inventory at cost and the purchases at cost. The retail value of goods available for sale is the sum of the beginning inventory at retail and the purchases at retail.In this case, the cost of goods available for sale is $32,000 + $40,000 = $72,000. The retail value of goods available for sale is $42,000 + $90,000 = $132,000. Therefore, the cost-to-retail ratio is $72,000 / $132,000 = 54.55%.

The Following Information Is Available for the Past Year for a Retail