Laura's Department Store Uses the Average Cost Retail Inventory Method

question 5

Multiple Choice

Laura's Department Store uses the average cost retail inventory method to determine its ending inventory. The accounting records for the current year for Laura's contained the following information: $\begin{array}{lll}\underline{\text { Retail }}&\underline{\text {Cost}} \\ \$ 87,750 & \$ 71,200 & \text { Purchases } \\23,500 & 17,000 & \text { Begining inventory } \\98,000 & & \text { Sales } \\6,500 & & \text { Net markups } \\3,000 & & \text { Net markdowns }\end{array}$
In addition, the accounting records for Laura's disclosed that purchases returns at cost and retail were $1,950 and $4,250, respectively. What is the cost-to-retail percentage to be used for ending inventory calculations?

• A) 75.1%
• B) 79.8%
• C) 76.8%
• D) 78.1%

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