Question

Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information Cost Retail Merchandise inventory, January 1, 2018 Net purchases Net markups Net markdowns Net sales $169,000 $260,000 358,800 515,000 8,000 3,000 360,000 Related retail price indexes are as follows: January 1, 2018 December 31, 2018 1.00 1.20 Required Determine ending inventory and cost of goods sold Ending inventory at retail Ending inventory at cost Cost of goods sold

Answer 1

Cost Retail Beginning Inventory Plus : Net purchases 69,000.00$ 358,800.00 $ 260,000.00 515,000.00 8,000.00 (3,000.00) 20,000.00 780,000.00 360,000.00 420,000.00 Net mark ups Less: Net mark downs Goods avalable for sale (Excl. beginning inventory)$ Goods avaiable for sale (nd. beginning inventory) $ Less : Net sales Estimated ending inventory at current year retail prices Estimated ending inventory at cost (Note) Estimated cost of goods sold 358,800.00$ 527,800.00 $ 243,520.00 284,280.00 Base layer cost to retail % 2018 ayer cost to retail % 169000/260000 358800/520000 65% 69% Note* Estimated ending inventory at cost (Note) Ending inventory at year end retail Ending inventory at base year retail price inventory layers converted to cost (260000*1.0*65%) (90000*1.2*6996) 420,000.00 $ 350,000.00$ 169,000.00 (420000/1.2) 74,520.00 243,520.00