Answer:
1) Ending inventory at retail = $161,000
2) Ending inventory at cost = $85,750
3) Cost of goods sold = $100,800
Explanation:
Estimated ending inventory at retail is:
Beginning inventory $73,150 $133,000
Plus: Net Purchases $113,400 $257,000
Net markups 8,000
Less: Net markdowns (13,000 )
Goods available for sale (excluding beginning inv.) $113,400 $252,000
Goods available for sale (including beginning inv.) $186,550 $385,000
Less: Net sales ($224,000)
Estimated ending inventory at retail = $385,000 - $224,000 = $161,000
Estimated ending inventory at cost:
cost to retail percentage (2018) $113,400 / $252,000 = 45%
cost to retail percentage (base) $73,150 / $133,000 = 55%
ending inventory at cost = [45% x ($161,000 - $133,000)] + (55% x $133,000) = $12,600 + $73,150 = $85,750
Cost of goods sold (COGS) = $224,000 x 45% = $100,800
