On January 1, 2018, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at...
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Accounting
On January 1, 2018, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2018 and 2019 are as follows:
2018
2019
Cost
Retail
Cost
Retail
Beginning inventory
$
162,500
$
250,000
Purchases
800,000
1,084,000
$
680,000
$
1,063,000
Purchase returns
7,000
12,150
2,000
4,300
Freight-in
12,500
2,000
Net markups
6,900
11,800
Net markdowns
4,750
8,000
Net sales to customers
950,000
722,000
Sales to employees (net of 25% discount)
22,500
22,500
Normal spoilage
4,200
6,900
Price Index:
January 1, 2018
1.00
December 31, 2018
1.25
December 31, 2019
1.25
Required:. Estimate the 2018 ending inventory and cost of goods sold using the average cost retail method.
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