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August 28, 2014

August 28, 2014

Posted by **Sara** on Tuesday, March 29, 2011 at 8:39am.

Sporting Goods Jewelry and Cosmetics

Cost Retail Cost Retail

Net sales $1,000,000 $1,160,000

Purchases $675,000 1,066,000 $741,000 1,158,000

Purchase returns (26,000) (40,000) (12,000) (20,000)

Purchase discounts (12,360) — (2,440) —

Freight-in 9,000 — 14,000 —

Beginning inventory 47,360 74,000 39,440 62,000

At December 31, Neer Department Store takes a physical inventory at retail. The actual retail values of the inventories in each department are Sporting Goods $95,000, and Jewelry and Cosmetics $44,000.

Determine the estimated cost of the ending inventory for each department on August 31, 2011, using the retail inventory method. (Round ratio computations to 0 decimal places eg 54% and answers to 0 decimal places, e.g. 125.)

Compute the ending inventory at cost for each department at December 31, assuming the cost-to-retail ratios are 60% for Sporting Goods and 64% for Jewelry and Cosmetics.

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