A company uses the retail inventory method and has the following information available concerning its most recent accounting period:?At CostAt RetailJanuary 1 beginning inventory$167,340$304,240Cost of goods purchased 561,8501,021,560Sales?940,400Sales returns?40,2001. Use the retail inventory method to estimate the company's year-end inventory at cost.2. A year-end physical count at retail prices yields a total inventory of $404,800. Prepare a calculation showing the company's loss from shrinkage at cost and at retail.
What will be an ideal response?
1.
| $729,190/1,325,800 = | .55 |
| $1,325,800 - $900,200 = | $425,600 |
| $425,600 * .55 = | $234,080 |
| $425,600 - $404,800 = | $20,800 inventory shrinkage at retail |
| $20,800 * .55 = | $11,440 inventory shrinkage at cost |
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