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  • May 27, 2007, 02:46 PM
    kanaali27
    Retail inventory method
    Problem 6-6BB
    Retail inventory method P4
    The records of Alaina Co. provide the following information for the year ended
    December 31:
    At Cost At Retail
    January 1 beginning inventory.. . $ 81,670 $114,610
    Cost of goods purchased.. . 492,250 751,730
    Sales.. . 786,120
    Sales returns.. . 4,480
    Required
    1. Use the retail inventory method to estimate the company’s year-end inventory.
    2. A year-end physical inventory at retail prices yields a total inventory of $78,550. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.

    My Answer is:
    At Cost At Retail
    Goods available for sale

    Beginning inventory $ 81,670 $114,610
    Coot of goods purchased 492,250 751,730
    Goods available for sale 573,920 866,340

    Sales Return 4,480
    Deduct net sales at retail 786,120
    Ending inventory at retail 75,740

    Cost-to-retail ratio: (573,920 / 866,340) = 66%
    Estimated ending inventory at cost (75,740 x 66%)... $ 49,988 (is the answer I got and it is not correct)
    Can any one please help me on where I went wrong with this problem. Thank you1
  • May 28, 2007, 06:42 AM
    masud
    I solved this question but found the same answer, don't know where is the problem.

    May be this link could help you.

    Retail Inventory Method: Definition and Much More from Answers.com
  • Nov 17, 2007, 02:34 PM
    kimmyeann
    Quote:
    Originally Posted by kanaali27
    Problem 6-6BB
    Retail inventory method P4
    The records of Alaina Co. provide the following information for the year ended
    December 31:
    At Cost At Retail
    January 1 beginning inventory . . . . . . . $ 81,670 $114,610
    Cost of goods purchased . . . . . . . . . . . 492,250 751,730
    Sales . . . . . . . . . . . . . . . . . . . . . . . . . 786,120
    Sales returns . . . . . . . . . . . . . . . . . . . . 4,480
    Required
    1. Use the retail inventory method to estimate the company’s year-end inventory.
    2. A year-end physical inventory at retail prices yields a total inventory of $78,550. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.

    My Answer is:
    At Cost At Retail
    Goods available for sale

    Beginning inventory $ 81,670 $114,610
    Coot of goods purchased 492,250 751,730
    Goods available for sale 573,920 866,340

    Sales Return 4,480
    Deduct net sales at retail 786,120
    Ending inventory at retail 75,740

    Cost-to-retail ratio: (573,920 / 866,340) = 66%
    Estimated ending inventory at cost (75,740 x 66%)..... $ 49,988 (is the answer i got and it is not correct)
    Can any one please help me on where i went wrong with this problem. Thank you1
    Here is the correct answers you need for the at retail side

    114610
    751730
    866340
    781640
    84700

    To get the net sales at retail (781640) you take the 786120 (sales) minus 4480 (sales returns) equalling 781640 ( deduct net sales at retail)
    That makes the ending inventory at retail 84700 then multiply that by 66% and you get the correct answer of 55902
  • Jul 19, 2008, 01:18 PM
    Herm9
    I have this exact problem in my accounting class. I have required 1 answered correctly but I have no idea what they are asking for #2. Can anyone explain what they are asking?





    Quote:
    Originally Posted by kanaali27
    Problem 6-6BB
    Retail inventory method P4
    The records of Alaina Co. provide the following information for the year ended
    December 31:
    At Cost At Retail
    January 1 beginning inventory . . . . . . . $ 81,670 $114,610
    Cost of goods purchased . . . . . . . . . . . 492,250 751,730
    Sales . . . . . . . . . . . . . . . . . . . . . . . . . 786,120
    Sales returns . . . . . . . . . . . . . . . . . . . . 4,480
    Required
    1. Use the retail inventory method to estimate the company’s year-end inventory.
    2. A year-end physical inventory at retail prices yields a total inventory of $78,550. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.

    My Answer is:
    At Cost At Retail
    Goods available for sale

    Beginning inventory $ 81,670 $114,610
    Coot of goods purchased 492,250 751,730
    Goods available for sale 573,920 866,340

    Sales Return 4,480
    Deduct net sales at retail 786,120
    Ending inventory at retail 75,740

    Cost-to-retail ratio: (573,920 / 866,340) = 66%
    Estimated ending inventory at cost (75,740 x 66%)..... $ 49,988 (is the answer i got and it is not correct)
    Can any one please help me on where i went wrong with this problem. Thank you1
  • Jul 20, 2008, 12:32 AM
    morgaine300
    Compare the estimated ending inventory to the actual physical count. Notice it says "at retail" so you must use the retail of the estimated inventory to do this. Your physical count shows a lower number than the estimation based on book purchases and sales. So how much is the loss? Then use the same ratio to get the loss at cost.
  • Aug 31, 2008, 11:53 AM
    greeneyedguera7
    Goods available for sale
    Beginning Inventory $81,670 $114,610
    Cost of Goods Purchased 492,250 751,730
    Goods available for sale 573,920 866,340
    Deduct: Sales @ Retail 781,640
    Ending Inventory @ Retail $84,700

    Cost to Retail Ratio (573,920 / 866,340) = 66%

    Estimated Ending Inventory @ Cost ($84,700 X 66%) = $55,902

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