Penfold's Paints Uses the Average Cost Retail Method to Estimate

question 32

Essay

Penfold's Paints uses the average cost retail method to estimate its ending inventories. The following data has been summarized for the year 2009:
Required:
Compute the cost-to-retail percentage used by Penfold's Paints.
$\begin{array}{lr}& \text { Cost } & \text { Retail } \\\text { Inventory, January 1 } && \$ 65,000 \\\text { Purchases } && 270,000 \\\text { Net markups } && 3,600 \\\text { Net markdowns } && 2,100 \\\text { Net sales } && 260,000\\\text { Inventory, December } 31& \$ 55,080\end{array}$

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