Question
.A company using the conventional retail method has the following information for the current year's operations: Cost Retail Beginning inventory $ 100,000 $ 150,000 Purchases
.A company using the conventional retail method has the following information for the current year's operations:
| Cost |
| Retail |
| ||||||
Beginning inventory | $ | 100,000 |
|
| $ | 150,000 |
| |||
Purchases |
| 500,000 |
|
|
| 800,000 |
| |||
Net markups |
|
|
|
|
| 85,000 |
| |||
Net markdowns |
|
|
|
|
| 35,000 |
| |||
Net sales |
|
|
|
|
| 750,000 |
| |||
Management calculates the cost-to-retail percentage as 60%, equal to cost of $600,000 ($100,000 + $500,000) divided by retail of $1,000,000 ($150,000 + $800,000 + $85,000
$35,000). Which of the following statements is correct?
A) The cost-to-retail percentage should be calculated as cost of $600,000 divided by retail of $750,000 (Net sales).
B) The retail amount should be $1,035,000, excluding net markdowns.
C) The cost and retail amounts should not include beginning inventory of $100,000 and $150,000, respectively.
D) The retail amount should be $950,000, excluding net markups and net markdowns.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started