Question

Crosby Company owns a chain of hardware stores throughout the state. The company uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the three months ending March 31, 2021: Cost $ 260,000 760,000 Beginning inventory Net purchases Net markups Net markdowns Net sales Retail $365,000 934,000 18,000 2,000 912,000 Required: Complete the table below to estimate the LIFO cost of ending inventory and cost of goods sold for the three months ending March 31, 2021, using the information provided. Assume stable retail prices during the period. Cost Retail Cost-to-Retail Ratio Beginning inventory Plus: Net purchases Net markups Less: Net markdowns Goods available for sale (excluding beg. inventory) Goods available for sale (including beg. inventory) Cost-to-retail percentage Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Answer 1

Crosby Company Cost 260000 760000 Retail 365000 934000 18000 -2000 950000 760000 Beginning inventory Plus: Net purchases Net markups Less:Net markdowns Goods available for sale (excl. beg. Inventory) Cost-to-retail percentage: $760,000 / 950,000 = 80% Goods available for sale (incl. beg. Inventory) Less:Net sales Estimated ending inventory at retail Estimated ending inventory at cost: 1020000 1315000 -912000 403000 Retail 365000 38000 403000 Beginning inventory Current period's layer Total Estimated cost of goods sold Cost 260000 30400 290400 x 80% = -290400 729600