Question

ALLSIUNCUCUIULL HLOUD 17) Billingsly Products uses the conventional retail method to estimate its ending inventories. The following data has been summarized for the year 2018: Cost $ 53,000 322,360 Inventory, January 1 Purchases Net markups Net markdowns Net sales Retail $ 78,000 466,000 8,000 16,700 392,000 Required: Estimate the ending inventory as of December 31, 2018. (3 pts) Show your work or you will lose 1 point. 18) Charleston Company has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records: Cost $ 320,000 670,000 Merchandise inventory, January 1, 2018 Net purchases Net markups Net markdowns Net sales Pertinent retail price indexes: January 1, 2018 December 31, 2018 Retail $500,000 1,020,000 14,000 4,000 650,000 1.00 1.10 Required: Estimate the ending inventory for December 31, 2018. (4 pts) Show your work or you will lose 2 points. Page 80

Answer 1

Charleston Company Billingsly Products Retail Retail Cost Cost 320000 500000 Inventory January 1 53000 78000 Inventory Jan. 1 a Net Purchases Net Purchases 1020000 322360 466000 670000 Net Markups Net Markups 14000 8000 Net Mark downs -4000 375360 552000 Cost to Retail percentage Subtotal 670000 1030000 b Cost-to-retail: ($670,000/$1,030,000 65.0%) 375360/552000 68% Net Mark downs -16700 Goods available for sale 1530000 a+b 990000 Net sales Sales -392000 -650000 Ending Inventory at Retail 143 Ending inventory at current year retail 80000 Ending Inventory at Cost 143300 x 68% 97444 Ending Inventory At Year-end Retail Prices Ending Inventory at Base Year Retail Prices Inventory Layers at Base Year Retail Prices $880,000/1.10 = $800,000 $500,000 x 1.00 x .64 320000 300,000 x 1.10 x .65 214500 Inventory Layers Converted to Cost Total ending inventory at dollar-value LIFO retail cost 534500