Question

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows: The inventory at January 1, 2019, had a retail value of $31,000 and a cost of $11,000 based on the conventional retail method. Transactions during 2019 were as follows: Cost Retail Gross purchases $ 570,000 $ 953,000 Purchase returns 6,000 4,000 Purchase discounts 5,000 Gross sales 958,000 Sales returns 5,000 Employee discounts 3,000 Freight-in 20,000 Net markups 20,000 Net markdowns 4,000 Sales to employees are recorded net of discounts. The retail value of the December 31, 2020, inventory was $48,150, the cost-to-retail percentage for 2020 under the LIFO retail method was 42%, and the appropriate price index was 107% of the January 1, 2020, price level. The retail value of the December 31, 2021, inventory was $43,450, the cost-to-retail percentage for 2021 under the LIFO retail method was 41%, and the appropriate price index was 110% of the January 1, 2020, price level. Required: 2. Estimate ending inventory for 2019 assuming Raleigh Department Store used the LIFO retail method.

Answer 1

P9C Answer: @ The value of estimated Ending inventory for 2019 : d cost Retail Cost-to- octail ratiol 570,000 1953,000 $11,000 3 1,000 Beginning inventory Add purchases freight in 20.000 Purchase Return (6.000) (4,000) Purchase Discounts (5,000). net markups 20,000 Net markdowns (4,000 Goods available for saley (excluding beginig investy 579,000 965,000 Goods available for sale ( " 1 590000 996.000 Gost to Relail percentage ( 579000/ 965000) X100 Gol Net sales (958,000 - 5,000) Employee Discounts Estimated Ending inventory at Retail 453,000) (3,000 40,000 $ 16,400 Beginning inventory = $ 40000 cutrend Period's layer: 40.000 – 31,000 = 9,000 = $ 40,000+ 9,000 49,000

Estimated Ending inuntory at cost = 9000 x 60 6+ Woo = 5400 +11,000 =$16,400 L i estimated Ending inventory at cost = €16,400