Dakota Company had net sales (at retail) of $260,000. At Cost At Retail

Beginning inventory $ 63,800 $ 128,400

Cost of goods purchased 115,060 196,800

The above additional information is available from its records. Use the retail inventory method to estimate Dakota's year-end inventory at cost. (Round cost ratio to the nearest whole percentage.)

$35,860  

Explanation:

The computation of the ending inventory using the retail inventory method is shown below

Particulars                      Cost          Retail

Opening Inventory(A)   $63,800    $128,400

Purchases(B)                 $115,060    $196,800

Goods available

C=(A-B)                         $178,860     $325,200

Cost ratio

($178,860 ÷ $325,200 × 100) 55%  

Sales at retail (D)                            $260,000

End, Inventory at Retail                     $65,200

($325,200 - $260,000)

End, Inventory at Cost    $35,860  

($65,200 × 55%)

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