Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2021: Cost Merchandise inventory, January 1, 2021 Purchases $270,000 629,000 16,000 Retail $288,000 904,000 Freight-in Net markups Net markdowns Net sales 28,000 4,800 880,000 Required: Determine the December 31, 2021, inventory by applying the conventignal retail method using the information provided. (Round ratio calculation to 2 decimal places (I.e., O.1234 should be entered as 12.34%.). Enter amounts to be deducted with a minus sign.) Cost-to-Retail Cost Retail Ratio Beginning inventory 24 270,000 $ 288,000 Purchases 629,000 904,000 Freight-in 16,000 Net markups 28,000 1,220,000 (4,800) Net markdowns 915,000 1,215,200 Goods available for sale 75.29 % Cost-to-retail percentage (880,000) Net sales 225 000 < Prev. 5 of 9 Next >

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A:

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.