Tucker Department Store Utilizes the Retail Inventory Method to Estimate

question 201

Multiple Choice

Tucker Department Store utilizes the retail inventory method to estimate its inventories. It calculated its cost to retail ratio during the period at 75%. Goods available for sale at retail amounted to $800,000 and goods were sold during the period for $500,000. The estimated cost of the ending inventory is

• A) $300,000.
• B) $600,000.
• C) $225,000.
• D) $400,000.

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Definitions:

Total Asset Turnover

Total asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue, calculated by dividing sales by average total assets.

Gross Profit Percentage

A financial metric expressed as a percentage that calculates the gross profit as a portion of net sales, indicating how efficiently a company uses its resources.

Research and Development

Activities undertaken by a company to innovate and introduce new products or services, or to improve their existing offerings.

International Financial Reporting Standards

A set of accounting standards developed by the International Accounting Standards Board that provides globally consistent financial reporting norms.