Rosa Langley Fashions tags its inventory with retail prices, but does not keep thorough inventory records. The
Question:
Rosa Langley Fashions tags its inventory with retail prices, but does not keep thorough inventory records. The lax system makes it very costly for the company to determine the cost of store inventory. The cost of Rosa Langley Fashions’ merchandise is typically 40% to 60% of retail price, so the company determines cost of ending inventory by calculating retail price of ending inventory and dividing by 2 (to get 50%).
Required:
Write the CEO of Rosa Langley Fashions a letter explaining the errors that might be created by the company’s inventory system.
Ending Inventory The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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The method of inventory valuation and the calculation of cost of goods sold used by your compan...View the full answer
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