Flynn Sales Company Uses the Retail Inventory Method to Value

Multiple Choice

Flynn Sales Company uses the retail inventory method to value its merchandise inventory.The following information is available for the current year: $\begin{array}{lcc}&\text { Cost } & \text { Retail }\\\hline\text { Beginning inventory } & \$ 30,000 & \$ 50,000 \\\text { Purchases } & 145,000 & 200,000 \\\text { Freight-in } & 2,500 & - \\\text { Net markups } & - & 8,500 \\\text { Net markdowns } & - & 10,000 \\\text { Employee discounts } & - & 1,000 \\\text { Sales } & - & 205,000\end{array}$ If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost to retail ratio?

A) $177,500 ÷ $250,000
B) $177,500 ÷ $258,500
C) $175,000 ÷ $260,000
D) $177,500 ÷ $248,500