Question

Vaughn Company began operations on January 1, 2019, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2019 and, because there was no beginning inventory, its ending inventory for 2019 of $38,600 would have been the same under either the conventional retail system or the LIFO retail system.

On December 31, 2020, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2020, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.

		Cost			Retail
Inventory, Jan. 1, 2020		$38,600			$59,000
Markdowns (net)					12,900
Markups (net)					22,300
Purchases (net)		129,700			175,800
Sales (net)					166,000

Determine the cost of the 2020 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to 2 decimal place, e.g. 78.72% and final answers to 0 decimal places, e.g. 28,987.)

(a)		Ending inventory using conventional retail method		$enter a dollar amount rounded to 0 decimal places
(b)		Ending inventory LIFO retail method		$enter a dollar amount rounded to 0 decimal places

Answer 1

Answerin a conventional reland method o- cost Retail $ 59,000 $ 38600 Inventory Jan 1, 2020 purchases Cnet) 175,800 129,700 $168300 $ 234,800 22300 Add: - Net markups Totals $ 168,300 $257,100 (129003 less; Net markdowns 244,200 . soles price of goods available Leviz Sales Cnet !! (166,000) Ending inventory at retail $78,200

cost to retail ratio = $ 168,300 x 100 257,100 = 65.46.1 Ending inventory at cost = $78200 x 65.460% = $51,190

GAL (bUFO Retail method - particulars cost $38600 (29-700 Retail $59000 175800 Inventory Jan 1, 2010 Purchases (net) Add:- Markups (net) 22300 Total (excluding beginning Inventory $ 129700 $ 198,100 Toteu (including beginning) $168300 257.100 Inventon lessi- rane downs (net) (12900) Tex: sales (net) (166000) Ending inventory at retail $ 78200 Cost to retail ratio : $129,700 vloo $198,100 65.4741 computation of ending inventory at LIFO costan Ending inventory at retain prices Layers at retail prices cost to Real percentage Ending inventory at LiTo cost 65.42% $38598 x $78200 2019-3, 59000 2020-1 19200 65.476% $ 12570 $ 51,168 # $ 38600X600 = 65.42% $59000