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Valuing Inventory at Lower Cost or Market Using Retail Methods

When you undertook the preparation of the financial statements for Green Company at January 31, 2010, the following data were available:
At Cost At Retail
Inventory, February 1, 2009 $70,800 $ 98,500
Markdowns 35,000
Markups 63,000
Markdown cancellations 20,000
Markup cancellations 10,000
Purchases 219,500 294,000
Sales 345,000
Purchases returns and allowances 4,300 5,500
Sales returns and allowances 10,000

Instructions
Compute the ending inventory at cost as of January 31, 2010, using the retail method which approximates lower of cost or market. Your solution should be in good form with amounts clearly labeled.

Solution Summary

When you undertook the preparation of the financial statements for Green Company at January 31, 2010, the following data were available:
At Cost At Retail
Inventory, February 1, 2009 $70,800 $ 98,500
Markdowns 35,000
Markups 63,000
Markdown cancellations 20,000
Markup cancellations 10,000
Purchases 219,500 294,000
Sales 345,000
Purchases returns and allowances 4,300 5,500
Sales returns and allowances 10,000

Instructions
Compute the ending inventory at cost as of January 31, 2010, using the retail method which approximates lower of cost or market. Your solution should be in good form with amounts clearly labeled.

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