New York Sales Inc

question 68

Essay

New York Sales Inc. uses the conventional retail method to estimate its ending inventories. The following data has been summarized for December 31, 2009:
Required:
Compute the cost-to-retail percentage used by New York Sales Inc.
$$\begin{array} { l c r } & \text { Cost } &{ \text { Retail } } \\\text { Inventory, January 1 } & & \$ 160,000 \\\text { Purchases } & & 538,000 \\\text { Net markups } & & 12,000 \\\text { Net markdowns } & & 9,100 \\\text { Net sales } & & 582,000 \\\text { Inventory, Dec. 31 } & \$ 77,285 &\end{array}$$

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Definitions:

Trade Payable

An amount owed by a business to its suppliers shown as a liability on the company's balance sheet.

Hedge Ratio

The proportion of an asset's or liability's exposure that is hedged by a derivative contract, reflecting the effectiveness of the hedge.

Forward Contact

A financial contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today, often used for hedging foreign exchange risk.

Planned Purchase

A forecasted acquisition of goods or services that an individual or organization intends to make, often based on budget considerations or strategic planning.