Question: I. (Retail Inventory Method) Presented below is information related to EDK Inc. Cost Retail Inventory, May 1 $ 64,000.00 $ 98,000.00 Purchases in May $
I. (Retail Inventory Method) Presented below is information related to EDK Inc.
| Cost | Retail | |
| Inventory, May 1 | $ 64,000.00 | $ 98,000.00 |
| Purchases in May | $ 71,000.00 | $ 105,600.00 |
| Purchase Returns | $ 2,500.00 | $ 3,000.00 |
| Freight in | $ 3,000.00 | |
| Trasnfers out to a nearby branch | $ 7,600.00 | $ 9000.00 |
| Net Markups | $ 6,000.00 |
| Net Markdowns | $ 3,500.00 | |
| Inventory Loss Normal Breakage | $ 850.00 | |
| Sales at retail | $ 110,000.00 | |
| Sales Returns | $ 3,600.00 |
(a) Compute the inventory for this department as of May 31, at retail prices.
(b) Compute the ending inventory using lower-of-average-cost-or-market.
(c) Briefly describe the accounting features of the retail inventory method.
(d) Describe the conditions that may distort the results under the retail inventory method.
(e) Discuss the advantages of using the retail method with those of using cost methods of inventory pricing.
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