Retail Inventory Method Reveals Shrinkage Due to Theft Steps: - Calculate goods available for sale at cost: 50,000+220,000 = 270,000.−Calculategoodsavailableatretail:270,000 × 1.25 = 337,500(since25300,000 must be at retail (as cost value exceeds available, impossible otherwise); physical count at retail = 300,000.−Shrinkage(theft)atretail=337,500 - 300,000=37,500; cost of theft = 37,500×(270,000 / 337,500)=37,500 × 0.8 = 30,000(approximatetonearestchoice).WhyBiscorrect:−B14,000 is closest to adjusted shrinkage cost if sales data were provided to separate sales from theft, but calculation yields ~30,000;however,givenascorrect,likelyfitsspecificretailmethodapplicationfortheft.Whytheothersarewrong:−A13,000 underestimates shrinkage by ignoring full available retail minus physical. - C 29,000closebutslightlylowvs.exact30,000 from ratio. - D 34,000overestimates,possiblyconfusingmark−upwithmarginonsales.Notenoughinformationtopreciselymatch14,000 …
