The following information is available for the month of June for a retail store:

Sales
$79,000
Sales Returns
$1,000
Markups
$10,000
Markup cancellations
$1,000
Markdowns
$9,300
Purchases (at cost)
$40,000
Purchases (at retail)
$107,000
Purchase returns (at cost)
$1,200
Purchase returns (at retail)
$2,000
Beginning inventory (at cost)
$30,000
Beginning inventory (at retail)
$46,000

Required:
Calculate the ending inventory at cost using the conventional retail method. Round ratios to four decimal places. (For example, 0.40127 = 0.4013)

What will be an ideal response?

Answer:

Cost
Retail
Beginning inventory
$30,000
$46,000
Purchases
$40,000
$107,000
Purchase returns
($1,200)
($2,000)
Markups

$10,000
Markup cancellations
_______
($1,000)
Subtotal for ratio
$68,800
$160,000
Ratio $68,800 / $160,000 = 43.00%

Markdowns

($9,300)
Sales(net)

($78,000)
Ending inventory 43.00% × $72,700 =
$31,261
$72,700

Ending inventory at cost is $31,261.