Question

As of January 1, 2017, Skysong Inc. adopted the retail method of accounting for its merchandise inventory.

To prepare the store’s financial statements at June 30, 2017, you obtain the following data.

		Cost			Selling Price
Inventory, January 1		$28,600			$40,200
Markdowns					9,800
Markups					8,800
Markdown cancellations					6,400
Markup cancellations					2,900
Purchases		106,566			158,000
Sales revenue					151,600
Purchase returns		3,100			4,000
Sales returns and allowances					7,500

Part 1

Compute Skysong’s June 30, 2017, inventory under the conventional retail method of accounting for inventories. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Inventory under the conventional retail method

$

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Part 2

Without prejudice to your solution to part (a), assume that you computed the June 30, 2017, inventory to be $59,400 at retail and the ratio of cost to retail to be 71.14%. The general price level has increased from 100 at January 1, 2017, to 108 at June 30, 2017. Compute the June 30, 2017, inventory at the June 30 price level under the dollar-value LIFO retail method. (Round ratios for computational purposes to 2 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory at dollar-value LIFO cost

$

Answer 1