Presented below is information related to Waveland Inc. Assuming that Waveland I

Question

Presented below is information related to Waveland Inc.

Assuming that Waveland Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2015.

Cost Retail Inventory, 12/31/14 $275,100 $401,000 Purchases 1,029,465 1,485,000 Purchase returns 62,170 81,500 Purchase discounts 20,050 Gross sales revenue 1,417,200 Sales returns 97,700 Markups 123,900 Markup cancellations 40,900 Markdowns 48,100 Markdown cancellations 28,300 Freight-in 42,280 Employee disccounts granted 8,600 Loss from breakage (normal) 5,600

Explanation / Answer

Cost Retail Inventory, 12/31/14 $275,100 $401,000 Purchases 1,029,465 1,485,000 Purchase returns -62,170 -81,500 Purchase discounts -20,050 Freight-in 42,280 Markups 123,900 Markup cancellations -40,900 Total $1,264,625 $1,887,500 In conventional retail method cost to retail is calculated before the Mark down adjustment Cost to Retail=1264625/1887500= 67.00% Markdowns -48,100 Markdown cancellations 28,300 Net Available for sale $1,264,625 1,867,700 Gross sales revenue -1,417,200 Sales returns 97,700 Employee disccounts granted -8,600 Loss from breakage (normal) -5,600 Ending inventory Retail              534,000 Ending Inventory Cost=534000*67%= $    357,780.00

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