Compute the Cost of Ending Inventory Using the Retail Method

question 52

Multiple Choice

Compute the cost of ending inventory using the retail method when goods available for sale at cost are $10,000, retail is $27,000, and sales at retail equal $23,000. What will the cost ratio be? What will the cost of ending inventory be?

• A) Cost ratio 37%; ending inventory $4,000
• B) Cost ratio 43%; ending inventory $17,000
• C) Cost ratio 85%; ending inventory $8,520
• D) Cost ratio 37%; ending inventory $1,480

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