Question

1. Cheyenne Inc. had beginning inventory of $10,602 at cost and $18,600 at retail. Net purchases were $118,014 at cost and $175,500 at retail. Net markups were $9,300, net markdowns were $6,800, and sales revenue was $149,800. Compute ending inventory at cost using the LIFO retail method. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using LIFO retail method

$

2. Nash Inc. had beginning inventory of $9,774 at cost and $18,100 at retail. Net purchases were $138,776 at cost and $179,700 at retail. Net markups were $9,300, net markdowns were $6,400, and sales revenue was $145,700. Assume the price level increased from 100 at the beginning of the year to 115 at year-end. Compute ending inventory at cost using the dollar-value LIFO retail method. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using the dollar-value LIFO retail method

$

Answer 1

Solution 1 Ending Inventory at cost using LIFO Retail method Cost to Cost Price (A) Retail Price Retail % Particulars (B) (A/B) x100 Beginning Inventory 57.0% 10,602 18,600 Add: Net Purchases 1,18,014 1,75,500 Add: Markups 9,300 Less: Markdowns (6,800) 1,78,000 Totals (excluding begin Inventory) 1,18,014 66.3% Total (including beg inventory) 1,28,616 1,96,600 Net Sales during period (1,49,800) Ending inventory at retail 46,800 The Ending $46800 inventory comprises of Beginning inventory $18600 and the remaining purchased during the year ($46,800 - $18,600) $28,200 Computation of Inventory at cost price End Inventory at Retail Layers at Inventory Cost to Retail Prices Retail % Prices at cost 57.0% 46800 18600 10602 66.3% 28200 18697 Ending Inventory using LIFO retail method 29299

Solution 2 Ending Inventory at cost using Dollar-Value LIFO retail method Cost to Retail Price Retail % (A/B) x100 Cost Price (B) (A) Particulars Beginning Inventory 18,100 54.0% 9,774 Add: Net Purchases 1,38,776 1,79,700 Add: Markups 9,300 Less: Markdowns (6,400) Totals (excluding begin Inventory) 76.0% 1,38,776 1,82,600 Total (including beg inventory) 1,48,550 2,00,700 Net Sales during period (1,45,700) Ending inventory at Year end retail Price 55,000 Price Index Current Price Level / Initial Price level 115 100 Price Index 1.15 Ending Inventory at Base year retail price $55000 1.15 $ 47,826.1 This Ending inventory comprises of two layers , i.e, Beginning inventory $18100 and remaining from net purchases ($47826.1 - $18100) = $29,726.1 Beginning Inventory is already at Base price, However $29,726.1 will be converted to current year's price by multiplying it with 1.15 $29,726 x 1.15 = $34184.9 Computation of Inventory at cost price End Layers at Retail Prices Inventory Cost to at cost Retail % 54.0% 18,100 9774 76.0% 34,185 25981 Ending Inventory using dollar value LIFO retail 35755 method

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