You assemble the following information for Metlock Department
Store, which computes its inventory under the dollar-value LIFO
method.
Cost |
Retail |
|||
Inventory on January 1, 2020 | $630,000 | $900,000 | ||
Purchases | 1,152,000 | 1,440,000 | ||
Increase in price level for year | 9% |
Compute the cost of the inventory on December 31, 2020, assuming
that the inventory at retail is (a) $882,900 and (b) $1,095,450.
(Round ratios for computational purposes to 0 decimal
places, e.g. 78% and final answers to 0 decimal places, e.g.
28,987.)
(a) | Cost of the inventory on December 31, 2020 | $ | |
(b) | Cost of the inventory on December 31, 2020 | $ |
(a) | Cost of Inventory on December 31, 2020 | = | $ 5,67,000 | |
(b) | Cost of Inventory on December 31, 2020 | = | $ 7,21,560 | |
Cost | Retail | Cost to retail Percentage | ||
(i) | (ii) | (i) / (ii) | ||
Inventory | $ 6,30,000 | $ 9,00,000 | 70% | |
Purchase | $ 11,52,000 | $ 14,40,000 | 80% | |
(a) | Ending Inventory at retail | = | $ 8,82,900 | |
Ending Inventory at base year retail price | = | $ 8,10,000 | ($882900/1.09) | |
(It is less than $900000) | ||||
Inventory Base layer converted to cost | = | $ 5,67,000 | ($810000 X 70%) | |
(b) | Ending Inventory at retail | = | $ 10,95,450 | |
Ending Inventory at base year retail price | = | $ 10,05,000 | ($1095450/1.09) | |
Increase in Inventory | = | $ 1,05,000 | ($1095450 - $900000) | |
Inventory new layers converted to retail | = | $ 1,14,450 | ($105000*1.09) | |
Inventory new layers converted to cost | = | $ 91,560 | ($114450 X 80%) | |
Inventory Base layer converted to cost | = | $ 6,30,000 | ($900000 X 70%) | |
Total Inventory at cost | = | $ 7,21,560 | (91560 + $630000) |
You assemble the following information for Metlock Department Store, which computes its inventory under the dollar-value...
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