A Company Reports the Following Information Regarding Its Inventory

question 88

Multiple Choice

A company reports the following information regarding its inventory. Beginning inventory: cost is $80,000; retail is $130,000 Net purchases: cost is $65,000; retail is $120,000
Sales at retail: $145,000
The year-end inventory shows $135,000 worth of merchandise available at retail prices. What is the cost of the ending inventory calculated using the retail inventory method?

• A) $78,300.
• B) $73,125.
• C) $135,000.
• D) $72,900.
• E) $105,000.

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Definitions:

Trial Balance

A bookkeeping worksheet where the balances of all ledgers are compiled into debit and credit account columns to check the accuracy of the financial transactions recorded.

Reference Column

A column in a table or spreadsheet used to hold information or data that aids in categorization or identification.

General Journal

A ledger in which all transactions are initially recorded, dated, and described.

Transposition Error

A common accounting mistake where figures are mistakenly reordered, leading to inaccurate entries and discrepancies in financial records.