Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2021, the records indicate the following data: Beginning inventory Purchases Freight-in on purchases Purchase returns. Net markups Net markdowns Net sales Average cost ($ in 000s) Cost Retail $ 87 $ 132 1,013 678 37 2 Required: 1. Use the retail method to approximate cost of ending inventory valued under Average cost method. (Enter your answer in thousands including 2 decimal places, i.e. 12,550 would be 12.55.) Ending inventory ($ in 000s) 3 5 9 923

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…