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Retail Inventory Method

Kim's Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year.


Beginning inventory $ 30,000.00 $ 50,000.00
Purchases 145,000.00 200,000.00
Freight-in 2,500.00
Net Markups 8,500.00
Net Markdowns 10,000.00
Employee discounts 1,000.00
Sales 205,000.00

What is the estimated value of the ending inventory?

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The attached MS Excel document shows how the retail inventory method ...

Solution Summary

This solution is comprised of a detailed step-by-step explanation of how to calculate the estimated value of the ending inventory using the retail inventory method. These step-by-step explanations also include how to calculate the cost-to-retail ratio as well as the edning inventory at lower of cost or market. The special items relating to the retail method which included Markup, Markedowns, Freight-in and Employee discounts have also been noted.