You assemble the following information for Swifty Department Store, which computes its inventory under the dollar-value...

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You assemble the following information for Swifty Department Store, which computes its inventory under the dollar-value LIFO

business accounting

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Answer 1

Answer #1

	Cost	Retail	Ratio
Inventory	561600	720000	78
Purchases	921600	1152000	80

1) With 9% price level, inventory = $706320 / 1.09 = 648,000

It is lesser than the $720,000 beginning inventory thus inventory at cost :

648,000 * 78% = 505,440

2) With 9% price level, inventory = $876360 / 1.09 = 804,000

Thus there an increase of $84,000 (= $804000 - $720000 = 84,000)

New layer at retail: 84,000 * 1.09 = 91,560

New layer at cost: 91560 * 80% = 73,248

Plus base layer: 561600

Inventory at cost : $634,848

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Answer 2

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