Novak Inc. uses the retail inventory method to estimate endinginventory for its monthly financial...

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Accounting

Novak Inc. uses the retail inventory method to estimate endinginventory for its monthly financial statements. The following datapertain to a single department for the month of October2021.
Inventory, October 1, 2021
    At cost $51,800
    At retail 76,700
Purchases (exclusive of freight and returns)
    At cost 241,978
    At retail 424,300
Freight-in 16,500
Purchase returns
    At cost 5,400
    At retail 8,100
Markups 8,900
Markup cancellations 2,000
Markdowns (net) 3,500
Normal spoilage and breakage 9,900
Sales revenue 392,600

(a) Using the conventional retail method, preparea schedule computing estimated lower-of-cost-or-market inventoryfor October 31, 2021. (Round ratios for computationalpurposes to 0 decimal places, e.g 78% and final answer to 0 decimalplaces, e.g. 28,987.)
Ending inventory at lower-of-cost-or-market
$

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Requirement [a]

Ending Inventory using conventional retail inventory method, at lower of cost or market

$ 57,218.00

Working

	Cost	Retail	Cost to Retail Ratio	Working
Beginning Inventory	$ 51,800.00	$ 76,700.00
*Plus:* Purchases	$ 241,978.00	$ 424,300.00
Purchase Returns	$ (5,400.00)	$ (8,100.00)
Freight In	$ 16,500.00
Net Markups		$ 6,900.00
	$ 304,878.00	$ 499,800.00
*Less:* Net MarkDowns		$ 3,500.00
Goods Available for sale	$ 304,878.00	$ 496,300.00

*Cost to retail Percentage*			61.00%	( 304878 / 499800 ) x 100

*Less:* Normal Breakage	$ -	$ 9,900.00
*Less:* Net Sales		$ 392,600.00
Estimated ending inventory at retail		$ 93,800.00		496300 - 392600
Estimated ending Inventory at cost	$ 57,218.00 ANSWER			93800 x 61%

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Transcribed Image Text

In: AccountingNovak Inc. uses the retail inventory method to estimate endinginventory for its monthly financial statements....Novak Inc. uses the retail inventory method to estimate endinginventory for its monthly financial statements. The following datapertain to a single department for the month of October2021.Inventory, October 1, 2021 At cost$51,800 At retail76,700Purchases (exclusive of freight and returns) At cost241,978 At retail424,300Freight-in16,500Purchase returns At cost5,400 At retail8,100Markups8,900Markup cancellations2,000Markdowns (net)3,500Normal spoilage and breakage9,900Sales revenue392,600(a) Using the conventional retail method, preparea schedule computing estimated lower-of-cost-or-market inventoryfor October 31, 2021. (Round ratios for computationalpurposes to 0 decimal places, e.g 78% and final answer to 0 decimalplaces, e.g. 28,987.)Ending inventory at lower-of-cost-or-market$

Inventory, October 1, 2021
At cost		$51,800
At retail		76,700
Purchases (exclusive of freight and returns)
At cost		241,978
At retail		424,300
Freight-in		16,500
Purchase returns
At cost		5,400
At retail		8,100
Markups		8,900
Markup cancellations		2,000
Markdowns (net)		3,500
Normal spoilage and breakage		9,900
Sales revenue		392,600