Mch 9Homework × , Test 3 Folder . ACCT 21 C ezto mheducation.com/hm tpx Intern C

Question

Mch 9Homework × , Test 3 Folder . ACCT 21 C ezto mheducation.com/hm tpx Intern Ch. 9 Homework Question 5 5. 1000 points vslue Lance -Hefne Specialy Shoppes decided to use the dollar value LIFO retail method to value its inventory Accounting records provide the following information Cost Retail Merchandise inventory, Jarnuary 1, 2016 $315,000 420,000 537,200 675,000 24 000 19,000 550,000 Net purchases Net markups Nel markdowns Net sales Pertinent retai price indexes are as tollows: January 1. 2016 December 31, 2016 1.00 1 10 Required Datermine ending nventory and cost of goods sold Ending inventory al reta Ending inventory at cost ot goods sold Dithicuity 2 Medium TOSHIBA esc 2

Explanation / Answer

Solution:

Ending inventory at retail: 550,000

Ending inventory at cost: 500,000

COGS : 384,520

Working:

Particulars

Cost $

Retail $

Beginning Inventory

315,000

420,000

Add purchases

537,200

675,000

Add net markup

24,000

Less net markdown

-19,000

Net sales excluding beginning inventory

537,200

680,000

Net sales including beginning inventory

852,200

1,100,000

Net sales

550,000

Ending Inventory at current yr retail price

550,000

Base layer cost to retail % = 315,000/ 420,000 = 0.75 = 75%

2016 layer cost to retail % = 537,200 / 680,000 = 0.79 = 79%

Ending Inventory at base yr retail price = 550,000 / 1.10 = 500,000

420,000 *1 * 75% = 315,000

80,000 * 1.10 * 79% = 69,520

Total Inventory at dollar value LIFO retail cost = 384,520

Particulars

Cost $

Retail $

Beginning Inventory

315,000

420,000

Add purchases

537,200

675,000

Add net markup

24,000

Less net markdown

-19,000

Net sales excluding beginning inventory

537,200

680,000

Net sales including beginning inventory

852,200

1,100,000

Net sales

550,000

Ending Inventory at current yr retail price

550,000

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