Question

Current Attempt in Progress You assemble the following information for Shamrock Department Store, which computes its inventory under the dollar-value LIFO method. Inventory on January 1, 2020 Purchases Increase in price level for year Cost Retail $615,600 $810,000 1,036,800 1,296,000 9% Compute the cost of the inventory on December 31, 2020, assuming that the inventory at retail is (a) $794,610 and (b) $985,905. (Round ratios for computational purposes to O decimal places, e.g. 78% and final answers to O decimal places, e.g. 28,987.) (a) Cost of the inventory on December 31, 2020 $ (b) Cost of the inventory on December 31, 2020 $

Answer 1

Shamrock Department Store Requiment a Cost-to-retail ratio-beginning inventory: 615600 / 810000 76% ($794,610 1.09) x 76% = $554,040 + Since the above computation reveals that the inventory quantity has declined below the beginning level, it is necessary to convert the ending inventory to beginning-of-the-year prices (by dividing by 1.09) and then multiply it by the beginning cost-to-retail ratio (76%). Requiment b Ending inventory at retail prices deflated $985,905 1.09 904500 Beginning inventory at beginning-of-year prices 810000 Inventory increase in terms of beginning-of-year dollars 94500 Beginning inventory (at cost) 615600 Additional layer, $94,500 x 1.09 x 80% 82404 698004 *($1,036,800 $1,296,000) 80%