Harlingen Store Uses the Retail Method and Has the Following

question 66

Essay

Harlingen Store uses the retail method and has the following information available concerning their most recent accounting period:
$$\begin{array} { | l | r | r | } \hline & \text { At Cast } & \text { At Retail } \\\hline \text { Beginning-of-period inventory } & \$ 148,600 & \$ 245,200 \\\hline \text { Net purchases } & 677,400 & 1,229,800 \\\hline \text { Sales } & 1,200,000 & \\\hline\end{array}$$ (1) What is the cost ratio using the retail method? (2) What is the estimated cost of the ending inventory?

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that companies use for financial reporting.

GAAP

General Accepted Accounting Principles, which are a set of accounting standards and procedures used in the US to ensure consistency in financial reporting.

U.S. Standards

Guidelines or norms established in the United States for various activities or products, often referring to quality and safety criteria.

Principles-Based

An approach focusing on underlying principles as opposed to strict compliance with detailed rules, often used in regulation and accounting.