MCP - Retail Inventory Method

1. Domicile Company

Beginning invenory 180,000

Purchases 6,000,000
Purchase return (300,000)
Net markup 900,000
GAS - Conservative 6,780,000
Net markdown (140,000)
GAS - average 6,640,000
Less: Sales (3,600,000)
Sales return 90,000
Employee discounts (80,000)
Normal Shortage (130,000)
Abnormal shortage (200,000)
Ending inventory at retail 2,720,000

2. Carmela Company
Cost Retail
Beginning inventory 530,000 900,000
Purchases 6,080,000 8,700,000
Purchase discount (85,000)
Freight in 105,000
Mark up 600,000
GAS - conservative 65.00% 6,630,000 10,200,000 (6,630,000 / 10,200,000
Markdown (800,000)
GAS - average 70.53% 6,630,000 9,400,000 (6,630,000 / 9,400,000
Less: Sales (8,600,000)
Ending inventory at retail 800,000

Ending inventory at cost (800,000 x 65%) = 520,000

3. Sublime Company
Cost Retail
Beginning inventory 280,000 700,000
Purchases 2,480,000 5,160,000
Freight in 75,000
Markup 500,000
Markup cancelation (60,000)
GAS - conservative 45.00% 2,835,000 6,300,000 (2,805,000 / 6,300,000)
Markdown (250,000)
Markdown cancelation 50,000
GAS - average 46.48% 2,835,000 6,100,000 (2,805,000 / 6,100,000)
Less: Sales (5,000,000)
Normal shrinkage (5,000,000 x 2%) (100,000)
Ending inventory at retail 1,000,000

Ending inventory at cost (1,000,000 x 45%) = 450,000

4. Abscond Company
Cost Retail
Beginning inventory 700,000 1,000,000
Purchases 4,100,000 6,300,000
Markup 700,000
GAS - Conservative 60.00% 4,800,000 8,000,000 (4,800,000 / 8,000,000)
Markdown (500,000)
GAS - average 64.00% 4,800,000 7,500,000 (4,800,000 / 7,500,000)
Less: Sales (5,900,000)
Normal shoplifting losses (100,000)
Ending inventory at retail 1,500,000

Ending inventory at cost (1,500,000 x 64%) = 960,000

5. Bouquet Company
Cost Retail
Beginning inventory and purchases 6,000,000 9,200,000
Net markup 400,000
GAS - Conservative 62.50% 6,000,000 9,600,000 (6,000,000/9,600,000)
Net markdown (600,000)
GAS - average 66.67% 6,000,000 9,000,000 (6,000,000/9,000,000)
Less: Sales (7,800,000)
Ending inventory at retail 1,200,000
Ending inventory at cost (1,200,000 x 62.50%) = 750,000

GAS at cost 6,000,000

Ending inventory at cost (750,000)
COGS 5,250,000

6. Cavalier Company
Cost Retail
Beginning inventory 560,000 1,000,000
Purchases 4,000,000 6,200,000
Markup (5,000 items x P100) 500,000
Markup cancelation (1,000 items x P100) (100,000)
GAS - Conservative 60.00% 4,560,000 7,600,000 (4,560,000 / 7,600,000)
Mardown (50,000+30,000+120,000) (200,000)
GAS - average 61.62% 4,560,000 7,400,000 (4,560,000 / 7,400,000)
Less: Sales (5,400,000)
Ending inventory at retail 2,000,000

Ending inventory at cost (2,000,000 x 61.62%) = 1,232,400

or
Ending inventory at cost (2,000,000 x 62%) = 1,240,000

7. Fainhearted Company
Cost Retail
Beginning inventory 750,000 1,000,000
Purchase 4,150,000 5,800,000
Additional markup 200,000
GAS - conservative 70.00% 4,900,000 7,000,000 (4,900,000/7,000,000)
Markdown (100,000)
GAS - average 71.01% 4,900,000 6,900,000 (4,900,000/6,900,000)
Less: Sales (5,500,000)
Ending inventory at retail 1,400,000

Ending inventory at cost (1,400,000 x 71%) = 994,000

8. Deadlock Company
Cost Retail
Purchases 3,000,000 5,500,000
Net additional markup 500,000
Net markdown (1,000,000)
Net purchases - FIFO 60.00% 3,000,000 5,000,000 (3,000,000/5,000,000)
Beg inventory 600,000 1,500,000
GAS 3,600,000 6,500,000
Less: Sales (4,500,000)
Ending inventory at retail 2,000,000

Ending inventory at cost (2,000,000 x 60%) = 1,200,000

9. Emeritus Company
Cost Retail
Purchases 5,600,000 7,200,000
Freight in 400,000
Net markup 1,400,000
Net markdown (600,000)
Net purchases - FIFO 75.00% 6,000,000 8,000,000 (6,000,000/8,000,000)
Beg inventory 1,200,000 1,800,000
GAS 7,200,000 9,800,000
Less: Sales (7,600,000)
Ending inventory at retail 2,200,000

Ending inventory at cost (2,200,000 x 75%) = 1,650,000

TGAS at cost 7,200,000

Less: Ending inventory at cost (1,650,000)
COGS 5,550,000
10. Groom Company
Cost Retail
Net purchases 4,200,000 5,900,000
Net markup 200,000
Net markdown (100,000)
Net purchases - FIFO 70.00% 4,200,000 6,000,000 (4,200,000/6,000,000)
Beg inventory 1,200,000 1,500,000
GAS 5,400,000 7,500,000
Less: Net sales (5,500,000)
Ending inventory at retail 2,000,000

Ending inventory at cost (2,000,000 x 70%) = 1,400,000