Lacy's Linen Mart uses the average cost retail method to estimate inventories. Data for the first six months of 2021 include: beginning inventory at cost and retail were $64,500 and $123,000, net purchases at cost and retail were $315,000 and $483,000, and sales during the first six months totaled $493,000. The estimated inventory at June 30, 2021, would be:

Question

Business

Clarissa Hamilton

3 April, 04:17

Lacy's Linen Mart uses the average cost retail method to estimate inventories. Data for the first six months of 2021 include: beginning inventory at cost and retail were $64,500 and $123,000, net purchases at cost and retail were $315,000 and $483,000, and sales during the first six months totaled $493,000. The estimated inventory at June 30, 2021, would be:

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Answers (1)

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Grayson Reyes · Answer 1

Best estimate for inventory = $70,764.85

Explanation:

The closing inventory value at retail

= (Opening inventory + Purchases - sales) all in retail prices

= $123,000 + $483,000 - 493,000.

= 113000

Closing inventory value at cost

=113,000 * (64,500 + 315,000) / (123,000 + $483,000)

=70,764.85

Best estimate for inventory = $70,764.85