Using the retail inventory method, if the cost to retail ratio is 60% and ending inventory at retail is $45,000, then estimated ending inventory at cost is $27,000.

Question

Quizplus · Accepted Answer

Using the retail inventory method formula, we can find the estimated ending inventory at cost:

Estimated Ending Inventory at Cost = Estimated Ending Inventory at Retail x Cost-to-Retail Ratio 
Estimated Ending Inventory at Cost = $45,000 x 0.60 
Estimated Ending Inventory at Cost = $27,000

Therefore, the statement is true.

Using the Retail Inventory Method, If the Cost to Retail