Charleston Company has elected to use the dollar-value LIFO retall method to val
ID: 2592006 • Letter: C
Question
Charleston Company has elected to use the dollar-value LIFO retall method to value ts Inventory. The following data has been accumulated from the accounting records Merchandise inventory. January 1. 2018 Net markups Net narkdowns Net sales $285,750 $ 450,000 656,0001015,000 13,500 3,500 622, 500 Rertinent retail price indexes:: January 1, 201 Decenber 31, 2018 1.00 1.10 Required: Estimate the ending inventory for December 31, 2018. (Round Cost-to-retall percentage" to two decimai place Estimated ending inventory (At Retail) Estimated ending inventory (At Cost)Explanation / Answer
Cost-to-retail at year end = $656,000 / $1,025,000
........................................= 64%
Cost-to-retail at Beginning year = $285,750 / $450,000
...................................................= 63.5%
Inventory at Base Year Retail Prices = $852,500 / 1.1
...........................................................= $775,000
Ending Inventory at dollar-value LIFO cost = ($450,000 x 63.5%) + [($775,000 - $450,000) x 64%]
.....................................................................= $285,750 + ($325,000 x 64%)
.....................................................................= $285,750 + $208,000
.....................................................................= $493,750
Estimated ending inventory (At Retail) $852,500 Estimated ending inventory (At Cost) $493,750