On the basis of the following data, estimate the cost of the merchandise inventory at June 30 by the retail method:Cost Retail Merchandise inventory, June 1$

On the basis of the following data, estimate the cost of the merchandise inventory at June 30 by the retail method:

                                                          Cost  |  Retail

June 1 Merchandise inventory $  165,000 | $ 275,000

June 1–30 Purchases (net)       2,361,500 | 3,800,000

June 1–30 Sales                                          3,550,000

Answer:

Cost Retail Merchandise inventory, June 1$ 165,000 $ 275,000 Purchases in June (net)2,361,500 3,800,000 Merchandise available for sale $2,526,500 $4,075,000 $2,526,500 $4,075,000 Sales for June 3,550,000 Merchandise inventory, June 30, at retail price$ 525,000 Merchandise inventory, June 30, at estimated cost ($525,000 × 62%)$ 325,500