Question

On January 1, 2021, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows:

	2021						2022
	Cost			Retail			Cost			Retail
Beginning inventory	$	39,200		$	56,000
Net purchases		92,600			116,000		$	104,166		$	128,400
Freight-in		2,800						3,300
Net markups					14,000						9,600
Net markdowns					2,800						3,000
Net sales to customers					113,355						117,120
Sales to employees (net of 20% discount)					3,300						5,280
Price Index:
January 1, 2021											1.00
December 31, 2021											1.06
December 31, 2022											1.10

Required:
Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail inventory method.

Answer 1

For 2022: 5280 / 0.80 = 6600 - 5280 = 1320 = Employee Discounts Beginning inventory Plus: Net Purchases Cost 43970 104166 3300 Retail 65720 128400 Freight in 9600 -3000 135000 200720 107466 151436 Net Markups Less:Net Markdowns Goods available for sale (excluding beginning inventory) Goods available for sale (including beginning inventory) Cost-to-retail percentage: 107466 / 135000 = 79.6% Less: Net sales ($117,120 +5,280) Employee discounts Estimated ending inventory at current year retail prices Estimated ending inventory at cost (below) Estimated cost of goods sold -122400 - 1320 77000 -50975 100461 Ending Inventory at Year-End Retail Prices Ending Inventoryat Base Year Retail Prices 77000 / 1.10 Inventory Layers at Base Year Retail Prices 56000 x 1 x 70% 62000 - 56000 = 6000 x 1.06 x 75% 70000 - 56000 - 6000 = 8000 x 1.10 x 79.6% Total ending inventory at dollar-value LIFO retail cost 77000 70000 39200 4770 7005 50975