roblen 30-2 (AICPA Adapted) end, Huff Comy 7 tyes pany provided the following information: ear Cost Retail jnning Bee Hases f 735,000 1,015,000 ch 165,000 5,775,000 nal markups ’ —- it er cat P' _- 210,000 vai ‘or sale - available 4,900,000 7,000,000 gales for the year totaled P5,530,000, Markdowns amounted to p70,000. Under the approximate lower of average cost or market ret ail method, what amount should be reported as ending inventory? . a. 1,540,000 p. 1,400,000 c, 1,078,000 4. 980,000 Solution 30-2 Answer d Cost Retail Available for sale 4,900,000 7,000,000 Markdowns (70,000) Sales (5,530,000) Ending inventory at retail 1,400,000 Conservative cost ratio (4,900,000/7,000,000) 70% 980,000 Ending inventory at cost 2 The approximate lower of average cost or market retail method is the same as the conservative or conventional retail approach. 397Problem 30-5 (AICPA Adapted) ON t retail inventory ™Methog 7 used the average cos' i tg Hutch Company The following information related to Operations account for inventory. it year: for the current ) cont 000,000 Beginning inventory and purchases 6,000, Net markups Net markdowns Sales Retaj 9,200,099 400,009 600,009 What amount should be reported as cost of goods sold for the current year? 4,800,000 4,875,000 5,200,000 5,250,000 Be op Solution 30-5 Answer c Cost Beginning inventory and purchases 6,000,000 Net markups Net markdowns Goods available for sale Cost ratio (6,000/9,000) 66 2/3% Sales Ending inventory at retail Average cost (1,200,000 x 66 2/3%) Goods available for sale Ending inventory Cost of goods sold 400 Retail 9,200,000 400,000 (600,000) 9,000,000 (7,800,000) 1,200,000 800,000 6,000,000 {_ 800,000) 5,200,000