Clooney Department Store Estimates Inventory by Using the Retail Inventory

question 161

Multiple Choice

Clooney Department Store estimates inventory by using the retail inventory method.The following information was developed: The estimated cost of the ending inventory is

• A)$280,000.
• B)$336,000.
• C)$420,000.
• D)$466,667.

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Definitions:

F.O.B. Shipping Point

Purchaser pays or is responsible for the shipping costs from seller’s shipping point to purchaser’s location.

Discount Period

The established period after a sale during which a customer can pay the invoice at a reduced rate, incentivizing quicker payments and enhancing cash flow.

Merchandise Inventory

Goods that a company holds with the intent of selling them to customers.

Accounts Payable

Liabilities or amounts owed by a business to creditors for purchases or services rendered that haven't been paid for yet.