Question

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			Retail
Merchandise inventory, January 1, 2018	$	333,840		$	520,000
Net purchases		674,928			1,022,000
Net markups					14,200
Net markdowns					4,200
Net sales					661,000
Pertinent retail price indexes:
January 1, 2018		1.00
December 31, 2018		1.10

Required:
Estimate the ending inventory for December 31, 2018. (Round "Cost-to-retail percentage" to two decimal place.)

Estimated ending inventory (At Retail)?

Estimated ending inventory (At Cost)?

Answer 1

Computation of Estimated the ending inventory for December 31, 2018
	Cost ($)	Retail ($)
Inventory Jan. 1	333,840.00	520,000.00
Net purchases	674,928.00	1,022,000.00
Net markups		14,200.00
Net markdowns		(4,200.00)
Goods available for sale (excluding beginning inventory)	674,928.00	1,032,000.00
Goods available for sale (including beginning inventory)	1,008,768.00	1,552,000.00
Net sales		(661,000.00)
Ending inventory, at retail		891,000.00
Cost-to-retail ratio = 674.928/1,032,000 = 65%
Estimated ending inventory (At Retail) = 891,000 / 1.10 = $ 810,000
Estimated ending inventory (At Cost)
520,000 x 1.00 = $520,000
290,000 x 1.10 = $319,000
Total Estimated ending inventory (At Cost) = $839,000