6/20/2019 Chapter 10 Homework-khaled alobaid 1/3 Student: khaled alobaid Date: 06/19/19 Instructor: Mike Geiger Course: Intermediate Accounting - ACCT 3511 - Summer 2019 Assignment: Chapter 10 Homework Corporation uses the conventional retail method for financial reporting. The company's inventory records are summarized below. Everett (Click the icon to view the inventory records.) 1 Requirement Estimate 's ending inventory using the conventional retail method. (Round percentages to two decimal places, X.XX%.) Everett The conventional retail inventory method approximates the ending inventory balance by taking into consideration the requirement that firms report inventory at lower of cost or market based on the relationship between cost and selling price. Before we cover the conventional retail method, we will discuss the basic retail method and some retail method terminology. Large retail firms cannot track the costs of each sale of inventory. Instead, these companies may use the retail method by maintaining information on: • Beginning inventory and purchases in terms of cost to the company. • Beginning inventory and purchases in terms of the sales price (retail values). • Net sales at retail. The basic retail method does not, however, track information on sales at cost. To estimate both ending inventory at cost and cost of goods sold, the company: 1. Computes its cost-to-retail ratio by dividing the goods available for sale at cost by the goods available for sale at retail.
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