Problem -
Presented below is information related to Larkspur Company.
Cost Retail
Beginning inventory $ 53,710 $107,600
Purchases (net) 128,270 189,900
Net markups 10,147
Net markdowns 24,575
Sales revenue 197,550
Compute the ending inventory at retail.
Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%)
(1) Excluding both markups and markdowns. %
(2) Excluding markups but including markdowns. %
(3) Excluding markdowns but including markups %
(4) Including both markdowns and markups. %
Which of the methods in (b) above does the following?
Question: (1) Provides the most conservative estimate of ending inventory.
Excluding Both Markups and Markdowns.
Excluding Markdowns but Including Markups
Excluding Markups but Including Markdowns
Including Both Markdowns and Markups
Question: (2) Provides an approximation of lower-of-cost-or-market.
Excluding Both Markups and Markdowns.
Excluding Markdowns but Including Markups
Excluding Markups but Including Markdowns
Including Both Markdowns and Markups
Question: (3) Is used in the conventional retail method.
Excluding Both Markups and Markdowns.
Excluding Markdowns but Including Markups
Excluding Markups but Including Markdowns
Including Both Markdowns and Markups
Compute ending inventory at lower-of-cost-or-market.
Compute cost of goods sold based on (d).
Compute gross margin based on (d).