Mulligan Imports sells golf clubs for an average of $200, and which cost it $140. This is a cost-to-retail percentage of 70%. Mulligan’s beginning inventory has a cost of $1,000,000, it paid $1,800,000 for purchases during the month, and it had sales of $2,400,000. The calculation of its ending inventory is:
|
Beginning inventory |
$1,000,000 |
(at cost) |
|
Purchases |
1,800,000 |
(at cost) |
|
Goods available for sale |
= 2,800,000 |
|
|
Sales |
-1,680,000 |
(Sales of $2,400,000 x 70%) |
|
Ending inventory |
= $1,120,000 |