Please work the 2017 estimated ending invedntory for cost, retail, & cost of goo
ID: 2527189 • Letter: P
Question
Please work the 2017 estimated ending invedntory for cost, retail, & cost of goods sold.
On January 1, 2016, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2016 and 2017 are as follows: 2016 2017 CostRetail $27,300 42,000 Cost Retail Beginning inventory Net purchases Freight-in Net markups Net markdowns Net sales to customers Sales to employees (net of 20% discount) Price Index 80,080 109,000 $87,362 $ 115,100 2,100 10,500 2,100 100,530 2,600 8,200 2,300 104,220 4,160 500 2,600 January 1, 2016 December 31, 2016 December 31, 2017 1.00 1.08 1.12 Required: Estimate the 2016 and 2017 ending inventory and cost of goods sold using the dollar-value LIFO retail inventory method. (Round your cost-to-retail percentage calculations to 2 decimal places.) 2016 2017 Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods soldExplanation / Answer
Employee discounts must be deducted in the retail column.
2016:
$2,600
= $3,250 – 2,600 = $650 = Employee discounts
.80
Cost
Retail
Beginning inventory
$27,300
$ 42,000
Plus: Net purchases
80,080
109,000
Freight-in
2,100
Net markups
10,500
Less: Net markdowns
______
(2,100)
Goods available for sale (excluding beginning inventory)
82,180
117,400
Goods available for sale (including beginning inventory)
109,480
159,400
$ 82,180
Cost-to-retail percentage: = 70%
$117,400
Less: Net sales ($100,530 + 2,600)
Employee discounts
(103,130)
(650)
Estimated ending inventory at current year retail prices
$ 55,620
Estimated ending inventory at cost (below)
(34,482)
Estimated cost of goods sold
$74,998
___________________________________________________________________________
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-end at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
$55,620
$55,620 = $51,500 $42,000 (base) x 1.00 x 65% = $27,300
(above) 1.08 9,500 (2016) x 1.08 x 70% = 7,182
Total ending inventory at dollar-value LIFO retail cost ............ $34,482
2017:
$4,160
= $5,200 – 4,160 = $1,040 = Employee discounts
.80
Cost
Retail
Beginning inventory
$34,482
$ 55,620
Plus: Net purchases
87,362
115,100
Freight-in
2,600
Net markups
8,200
Less: Net markdowns
______
(2,300)
Goods available for sale (excluding beginning inventory)
89,962
121,000
Goods available for sale (including beginning inventory)
124,444
176,620
$ 89,962
Cost-to-retail percentage: = 74.35%
$121,000
Less: Net sales ($104,220 + 4,160)
Employee discounts
(108,380)
(1,040)
Estimated ending inventory at current year retail prices
$ 67,200
Estimated ending inventory at cost (below)
(41,560)
Estimated cost of goods sold
$82,884
___________________________________________________________________________
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-end at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
$67,200
$67,200 = $60,000 $42,000 (base) x 1.00 x 65% = $27,300
(above) 1.12 9,500 (2016) x 1.08 x 70% = 7,182
8,500 (2017) x 1.12 x 74.35% = 7,078
Total ending inventory at dollar-value LIFO retail cost ............ $41,560
Cost
Retail
Beginning inventory
$27,300
$ 42,000
Plus: Net purchases
80,080
109,000
Freight-in
2,100
Net markups
10,500
Less: Net markdowns
______
(2,100)
Goods available for sale (excluding beginning inventory)
82,180
117,400
Goods available for sale (including beginning inventory)
109,480
159,400
$ 82,180
Cost-to-retail percentage: = 70%
$117,400
Less: Net sales ($100,530 + 2,600)
Employee discounts
(103,130)
(650)
Estimated ending inventory at current year retail prices
$ 55,620
Estimated ending inventory at cost (below)
(34,482)
Estimated cost of goods sold
$74,998
___________________________________________________________________________
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-end at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
$55,620
$55,620 = $51,500 $42,000 (base) x 1.00 x 65% = $27,300
(above) 1.08 9,500 (2016) x 1.08 x 70% = 7,182
Total ending inventory at dollar-value LIFO retail cost ............ $34,482