Use the following information for questions
Trent Co.uses the retail inventory method.The following information is available for the current year. $\begin{array}{lcc}&\text { Cost }& \text { Retail }\ \hline
\text { Beginning inventory } & \$ 78,000 & \$ 122,000 \
\text { Purchases } & 295,000 & 415,000 \
\text { Freight-in } & 5,000 & - \
\text { Employee discounts } & - & 2,000 \
\text { Net markups } & - & 15,000 \
\text { Net Markdowns } & - & 20,000 \
\text { Sales } & - & 390,000
\end{array}$
-The approximate cost of the ending inventory by the conventional retail method is
A)$95,900.
B)$94,920.
C)$98,000.
D)$102,480.

Question

Use the following information for questions 
Trent Co.uses the retail inventory method.The following information is available for the current year. $\begin{array}{lcc}&\text { Cost }& \text { Retail }\ \hline
\text { Beginning inventory } & \$ 78,000 & \$ 122,000 \
\text { Purchases } & 295,000 & 415,000 \
\text { Freight-in } & 5,000 & - \
\text { Employee discounts } & - & 2,000 \
\text { Net markups } & - & 15,000 \
\text { Net Markdowns } & - & 20,000 \
\text { Sales } & - & 390,000
\end{array}$
-The approximate cost of the ending inventory by the conventional retail method is
A)$95,900.
B)$94,920.
C)$98,000.
D)$102,480.

Quizplus · Accepted Answer

The conventional retail method uses the following formula to calculate the approximate cost of the ending inventory:Cost of ending inventory = (Ending inventory at retail - Net markdowns) x (Cost of goods sold / Net sales)Cost of goods sold = Beginning inventory + Purchases + Freight-in - Employee discounts - Net markupsCost of goods sold = $78,000 + $295,000 + $5,000 - $2,000 - $15,000 = $376,000Ending inventory at retail = $390,000 - $20,000 = $370,000Cost of ending inventory = ($370,000 - $20,000) x ($376,000 / $390,000) = $95,900

Use the Following Information for Questions Trent Co -The Approximate Cost of the Ending Inventory by the Conventional

Use the Following Information for Questions
Trent Co -The Approximate Cost of the Ending Inventory by the Conventional