Thai Department Store uses the retail inventory method to estimate its monthly ending inventories. The following information is available for two of its departments at August 31, 2014.

At December 31, Thai Department Store takes a physical inventory at retail. The actual retail values of the inventories in each department are Sporting Goods $85,000, and Jewelry and Cosmetics $54,000.

Instructions
(a) Determine the estimated cost of the ending inventory for each department on August 31, 2014, using the retail inventory method.
(b) Compute the ending inventory at cost for each department at December 31, assuming the cost-to-retail ratios are 60% for Sporting Goods and 64% for Jewelry andCosmetics.

Transcribed Image Text:

Jewelry and Cosmetics Sporting Goods Cost Retail Cost Retail Net sales Purchases Purchase returns Purchase discounts 12,360) Freight-in Beginning inventory 47,360 $1,150,000 675,000 1,066,000 $741,000 ,158,000 (26,000 (40,000 (12,000 (20,000) $1,010,000 (2,440) 14,000 39,440 9,000 74,000 62,000