On the basis of the following data, estimate the cost of the merchandise inventory at June 30 by the retail method:
Cost | Retail
June 1 Merchandise inventory $ 165,000 | $ 275,000
June 1–30 Purchases (net) 2,361,500 | 3,800,000
June 1–30 Sales 3,550,000
Answer:
Cost Retail Merchandise inventory, June 1$ 165,000 $ 275,000 Purchases in June (net)2,361,500 3,800,000 Merchandise available for sale $2,526,500 $4,075,000 $2,526,500 $4,075,000 Sales for June 3,550,000 Merchandise inventory, June 30, at retail price$ 525,000 Merchandise inventory, June 30, at estimated cost ($525,000 × 62%)$ 325,500