On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method? Cost Retail May 01 Inventory $24,440 $40,740 May 01-31 Purchases (net) $42,030 $60,030 May 01-31 Sales (net) $92,390 Do not round intermediate calculations. Round your final answer to the nearest whole dollar. Select the correct answer. $25,920 $18,400 $23,928 $5,528

The estimated cost of the inventory on May 31 using the retail method is $5,528

Explanation:

In order to calculate the estimated cost of the inventory on May 31 using the retail method we would have to make the following calculation:

estimated cost of the inventory = (total retail-total sales) * ratio of cost to retail price

ratio of cost to retail price=$24,440+$42,030/$40,740+$60,030

ratio of cost to retail price=$66,470/$100,770

ratio of cost to retail price=65.96%

estimated cost of the inventory = ($40,740+$60,030-$92,390) * 65.96%

estimated cost of the inventory=$5,528

The estimated cost of the inventory on May 31 using the retail method is $5,528