Neer Department Store uses the retail inventory method to estimate its monthly ending inventories.The following information is available for two of its departments at August 31, 2008.
|
Sporting Goods |
Jewellery and Cosmetics |
|||
|
Cost |
Retail |
Cost |
Retail |
|
|
Net sales |
1,078,300 |
1,156,300 |
||
|
Purchases |
672,800 |
1,124,700 |
757,700 |
1,153,500 |
|
Purchase returns |
(26,120) |
(40,630) |
(11,670) |
(19,620) |
|
Purchase discounts |
(12,150) |
– |
(2,220) |
– |
|
Freight-in |
10,000 |
– |
15,580 |
– |
|
Beginning inventory |
45,120 |
72,830 |
37,550 |
61,310 |
At December 31, Neer Department Store takes a physical inventory at retail. The actual retail values of the inventories in each department are Sporting Goods $94,350, and Jewelry and Cosmetics $43,760.
a. Determine the estimated cost of the ending inventory for each department on August 31, 2008, using the retail inventory method. (Round cost-to-retail ratio to 2 decimal places , e.g. 10.50 in computations. Round final answers to 0 decimal places, e.g. 125.)
b. Compute the ending inventory at cost for each department at December 31, assuming the cost-to-retail ratios are 60% for Sporting Goods and 63% for Jewelry and Cosmetics.