Acc212-Neer Department Store uses the retail inventory method to estimate its monthly ending…

Neer 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, 2008.

Sporting Goods

Jewellery and Cosmetics

Cost

Retail

Cost

Retail

Net sales

1,078,300

1,156,300

Purchases

672,800

1,124,700

757,700

1,153,500

Purchase returns

(26,120)

(40,630)

(11,670)

(19,620)

Purchase discounts

(12,150)

(2,220)

Freight-in

10,000

15,580

Beginning inventory

45,120

72,830

37,550

61,310

At December 31, Neer Department Store takes a physical inventory at retail. The actual retail values of the inventories in each department are Sporting Goods $94,350, and Jewelry and Cosmetics $43,760.

a. Determine the estimated cost of the ending inventory for each department on August 31, 2008, using the retail inventory method. (Round cost-to-retail ratio to 2 decimal places , e.g. 10.50 in computations. Round final answers to 0 decimal places, e.g. 125.)

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 63% for Jewelry and Cosmetics.

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