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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?

Solution Preview

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.