Question

Joous Solu. The following udld are available for the three months ending March 31, 2021 Cost $310,000 750,000 Beginning inventory Net purchases Net markups Net markdowns Net sales Retail $381,000 986,000 21,000 7,000 946,000 Required: Complete the table below to estimate the LIFO cost of ending inventory and cost of goods sold for the three months ending March 31, 2021, using the information provided. Assume stable retail prices during the period. Cost Retail Cost-to-Retail Ratio Beginning inventory Plus: Net purchases Net markups Less: Net markdowns Goods available for sale (excluding beg. inventory) Goods available for sale (including beg. inventory) Cost-to-retail percentage Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Answer 1

Solution:

	Cost ($)	Retail ($)	Cost to Retail
Beginning inventory	310,000	381,000
Plus: Net purchases	750,000	986,000
Net markups		21,000
Less: Net markdowns		(7,000)
Goods available for sale (excluding beg. Inventory)	750,000	1,000,000
Goods available for sale (including beg. Inventory)	1,060,000	1,381,000
Cost to retail percentage: (750,000/1,000,000) =75%			75	%
Less: Net sales		946,000
Estimated ending inventory at retail		435,000
Estimated ending inventory at cost	350,500
Estimated cost of goods sold	709,500

*

	Retail	Cost
Beginning inventory	$381,000	$310,000
Current period's layer	$54,000 ($1,000,000 - $946,000)	$40,500($54,000 × 75%)
Total	$435,000	$350,500
Estimated cost of goods sold	$709,500($1,060,000 - $350,000)