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10 June, 02:43

Artemis Inc. began the year with $260,000 inventory at cost which had a retail value of $396,000. During the year purchases were made at a cost of $1,370,000 which would be $2,200,000 retail and the freight-in on these purchases totaled $86,000. Sales during the current year totaled $2,000,000 with net markups of $48,000 and markdowns of $72,000.

What is the ending inventory value at cost under the conventional retail method?

a. $371,228.

b. $378,092.

c. $386,804.

d. $572,000.

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  1. 10 June, 06:01
    0
    option (d) $572,000

    Explanation:

    Data provided in the question:

    Beginning inventory = $260,000

    Retail value of the inventory = $396,000

    Purchase of inventory = $1,370,000

    Retail of value of the inventory purchased = $2,200,000

    Freight-in on the purchases = $86,000

    Total sales = $2,000,000

    Net markups = $48,000

    Markdowns = $72,000

    Now,

    Total retail value of inventory

    = Retail value of the inventory + Retail of value of the inventory purchased + Net markups

    = $396,000 + $2,200,000 + $48,000

    = $2,644,000

    Ending inventory value

    = Total retail value of inventory - Total sales - Markdowns

    = $2,644,000 - $2,000,000 - $72,000

    = $572,000

    Hence,

    the correct answer is option (d) $572,000
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