A retail shop needs to estimate the cost of its ending inventory for insurance purposes. Since it is Christmas, it cannot close for a physical count of inventory. The shop uses a periodic inventory system. The insurance company will accept an estimate using the retail method. The shop owner knows the cost of opening inventory was $125,000 from the previous year-ends physical count and its selling price was $180,000. From invoices, the owner knows the cost of purchases was $100,000 and the retail selling prices totalled $260,000. Cash register receipts show that sales from the beginning of the year totalled $250,000.

What is the ending inventory under the retail method (round % to the nearest whole number)?

ANSWER

• $96,900

• $190,000

• $225,000

• $125,000

• I DON'T KNOW YET