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Retail inventory method
Asked May 27, 2007, 02:46 PM
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5 Answers 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 |
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| 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 | ||||
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| [quote=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 | ||||
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| 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=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 | ||||
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| 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. | ||||
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| 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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