Question
Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating tothe computation of the inventory at July 31,
Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating tothe computation of the inventory at July 31, 2020, are as follows:
CostRetail
Inventory, 2/1/20P200,000P250,000
Purchases1,000,0001,575,000
Markups, net175,000
Sales1,750,000
Estimated normal shoplifting losses20,000
Markdowns, net110,000
- Under the lower-of-cost-or-net realizable value method, Henke's estimated inventory at July 31, 2020is
- P72,000.
- P84,000.
- P96,000.
- P120,000.
Problem7
Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year:
CostRetail
Beginning inventoryP30,000P50,000
Purchases145,000200,000
Freight-in2,500
Net markups8,500
Net markdowns10,000
Employee discounts1,000
Sales205,000
- If the ending inventory is to be valued at the lower-of-cost-or-net realizable value, what is the cost to retail ratio?
- P177,500 P250,000
- P 177,500 P 258,500
- P175,000 P260,000
- P177,500 P248,500
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