Question

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. Required: 3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2020. Estimating ending inventory for 2020 and 2021.

Answer 1

Solution 3:

Raleigh Department Store
Dollar-Value LIFO Retail Method
Ending Inventory at Year-end Retail Prices	Ending Inventory at Base Year Retail Prices	Inventory Layers at Base Year Retail Prices	Inventory Layers Converted to Cost
Year 2020
61880	59500	57,500.00	39675
		2,000.00	1456
Total Ending Inventory at dollar-value LIFO retail Cost			41131
Year 2021
53500	50000	50000	34500
Total Ending Inventory at dollar-value LIFO retail Cost			34500