Lacy's Linen Mart uses the retail method to estimate inventories. Data for the first six months of 2009 include: beginning inventory at cost and retail were $60,000 and $120,000, net purchases at cost and retail were $312,000 and $480,000, and sales during the first six months totaled $490,000. The estimated inventory at June 30, 2009, would be:
A)$ 68,200.
B)$ 55,000.
C)$ 71,500.
D)$ 63,250.

Question

Quizplus · Accepted Answer

The estimated inventory at June 30, 2009, would be $68,200. This is calculated as follows:Beginning inventory at cost = $60,000Net purchases at cost = $312,000Cost of goods available for sale = $372,000Sales = $490,000Estimated inventory at June 30, 2009 = $372,000 - $490,000 = $68,200

Lacy's Linen Mart Uses the Retail Method to Estimate Inventories