Question 4

Sunshine Snacks uses the conventional retail inventory method to estimate its inventory cost.

Presented below is the relevant inventory information for the year to December 31, 2019.

Cost Retail

Inventory (January 1, 2019) $375,000 $ 550,000

Purchases 1,369,000 2,050,000

Purchase returns 90,000 120,000

Purchase discounts 27,000

Gross sales (after employee discounts) 2,110,000

Sales returns 145,000

Markups 180,000

Markup cancellations 60,000

Markdowns 65,000

Markdown cancellations 30,000

Freight-in 63,000

Employee discounts granted 12,000

Loss from breakage (normal) 8,000

Required:

Compute the cost of Sunshine Snacks ending inventory at December 31, 2019. Express the costto-retail ratio as a whole number. (14 marks)