Presented below is information related to Bobby Engram Company. Cost Retail
Beginning inventory $58,000 $100,000
Purchases (net) 122,000 200,000
Net markups 10,345
Net markdowns 26,135
Sales revenue 186,000

Required:
a. Compute the ending inventory at retail.
b. Compute a cost-to-retail percentage (round to two decimals) under the following conditions.

1. Excluding both markups and markdowns.
2. Excluding markups but including markdowns.
3. Excluding markdowns but including markups.
4. Including both markdowns and markups.

A. $ 98,210

B1. Cost to retail percentage 60%

B2. Cost to retail percentage 65.73 %

B3. Cost to retail percentage 58 %

B4. Cost to retail percentage 63.33 %

Explanation:

A. Computation for the ending inventory at retail

Inventory at Retail

Beginning Inventory$ 100,000

Purchase ( Net )$ 200,000

Net Markup$ 10345

Less Net Markdown($26,135)

Less Sales Revenue($ 186,000)

Ending Inventory $ 98,210

Therefore the ending inventory at retail will be $ 98,210

B1) Computation for a cost-to-retail percentage

Excluding both markups and markdowns.

Cost to Retail Percentage

Excluding both Markup and Markdown

CostRetail

Beginning Inventory$ 58,000$ 100,000

Purchase (Net)$ 122,000$ 200,000

Total$ 180,000$ 300,000

Cost to retail percentage = $180,000/$300,000 Cost to retail percentage = 60%

B2. Computation for a cost-to-retail percentage Excluding Markups but Including Markdown

CostRetail

Beginning Inventory$ 58,000$ 100,000

Purchase (Net)$ 122,000$ 200,000

Less Mark down ($ 26,135)

Total$ 180,000$273,865

Cost to retail percentage= $180,000 /$ 273,865*100

Cost to retail percentage= 65.73 %

B3. Computation for a cost-to-retail percentage Excluding Markdowns but including Markups

CostRetail

Beginning Inventory$ 58,000$ 100,000

Purchase Net$ 122,000$ 200,000

Add Net Markups $ 10,345

Total$180,000$ 310,345

Cost to retail percentage = $180,000 / $ 310,345*100

Cost to retail percentage = 58 %

B4. Computation for a cost-to-retail percentage Including both Markups and Markdown

CostRetail

Beginning Inventory$58,000$100,000

Purchase Net$ 122,000$ 200,000

Net Markups $ 10,345

Less Net Mardown ($26,135)

Total$ 180,000$ 284,210

Cost to retail percentage = $ 180,000/ $ 284,210 × 100

Cost to retail percentage = 63.33 %

Therefore the cost-to-retail percentage are:

B1. Cost to retail percentage 60%

B2. Cost to retail percentage 65.73 %

B3. Cost to retail percentage 58 %

B4. Cost to retail percentage 63.33 %

88 because 4 plus 4 equals 8. 40 plus 40 equals 80. 80 plus 8 equals 88