Question

Required information (The following information applies to the questions displayed below.] Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows: a. The inventory at January 1, 2019, had a retail value of $53,000 and a cost of $36,930 based on the conventional retail method. b. Transactions during 2019 were as follows: Cost $327,870 6,700 5,800 Retail $570,000 18,000 Gross purchases Purchase returns Purchase discounts Gross sales Sales returns Employee discounts Freight-in Net markups Net markdowns 568,000 7,500 2,000 30,500 33,000 18,000 Sales to employees are recorded net of discounts. c. The retail value of the December 31, 2020, inventory was $61,880, the cost-to-retail percentage for 2020 under the LIFO retail method was 70%, and the appropriate price index was 104% of the January 1, 2020, price level. d. The retail value of the December 31, 2021, inventory was $53,500, the cost-to-retail percentage for 2021 under the LIFO retail method was 69%, and the appropriate price index was 107% of the January 1, 2020, price level.

Don't know what I am doing wrong and where. Thanks for the help.

Answer 1

Solution:

Raleigh Department Store
LIFO Retail Method
	Cost	Retail	Cost to Retail ratio
Beginning Inventory	36930	53000
Add: Purchases	327870	570000
Add: Freight In	30500
Less: Purchase Return	-6700	-18000
less: Purchase Discounts	-5800
Add: Net Markups		33000
Less: Net Markdowns		-18000
Goods Available for Sale (excluding beginning inventory)	345870	567000
Goods Available for Sale (including beginning inventory)	382800	620000
Cost-to-retail Percentage ($345870/567000)			61%
Less: Net Sales ($568000 - $7500)		-5,60,500
Less: Employee Discounts		-2000
Estimated Ending Inventory at Retail		57,500
Estimated Ending Inventory at Cost	39675
Estimated Ending Inventory at Cost (Working):
	Retail	Cost
Beginning Inventory	53000	36930
Current Period's Layer	4,500	2745
Total	57500	39675