Question

On January 1, 2021, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows: Beginning inventory Net purchases Freight-in Net markups Net markdowns Net sales to customers Sales to employees (net of 20% discount) Price Index: January 1, 2021 December 31, 2021 December 31, 2022 2021 2022 Cost Retail Cost Retail $ 58,500 $ 78,000 110,180 127,000 $115,808 $133,100 3,900 4,400 19,500 11,800 3,900 4,100 125,380 119,140 3,600 6,000 1.00 1.08 1.14 Required: Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail inventory method. (Do not round other intermediate calculations. Round your cost-to-retail percentage calculation to 2 decimal places and final answers to the nearest whole dollar.) 2021 2022 Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Answer 1

HGC Camera Store Estimate the 2021 and 2022 ending inventory and cost of goods sold using the |dollar-value LIFO retail inventory method. 2021 2022 Estimated ending inventory at retail 90720 104880 Estimated ending inventory at cost 63684 71471 Estimated cost of goods sold 108896 112421 Employee discounts must be deducted in the retail column 2021 3600/(0.80) 4500 - 3600 900 Employee discounts Retail Cost Beginning inventory 58500 78000 Plus: Net Purchases 110180 127000 Freight in Net Markups 3900 19500 Less:Net Markdowns -3900 Goods available for sale (excluding beginning inventory) Goods available for sale (including beginning inventory) Cost-to-retail percentage 114080 / 142600 80 % Less: Net sales ($125,380 +3,600) 114080 142600 220600 172580 -128980 Employee discounts 900 Estimated ending inventory at current year retail prices 90720 Estimated ending inventory at cost (below) Estimated cost of goods sold -63684 108896 Ending Inventory at Year-End Retail Prices Ending Inventoryat Base Year Retail Prices 90720 1.08 90720 84000 58500 58500/ 78000 75 % Inventory Layers at Base Year Retail Prices 780000 x 1 x 75% 84000 78000 6000 x 1.08 x 80% 5184 = Total ending inventory at dollar-value LIFO retail cost 63684

For 2022 6000 0.80 7500 6000 1500 Employee Discounts Cost Retail Beginning inventory 63684 90720 Plus: Net Purchases 115808 133100 Freight in 4400 Net Markups 11800 Less:Net Markdowns -4100 Goods available for sale (excluding beginning inventory) 140800 120208 Goods available for sale (including beginning inventory) 183892 231520 Cost-to-retail percentage 120208 140800 85.38% Less: Net sales ($119,140+ 6,000) Employee discounts -125140 -1500 Estimated ending inventory at current year retail prices 104880 Estimated ending inventory at cost (below) -71471 Estimated cost of goods sold 112421 Ending Inventory at Year-End Retail Prices 104880 Ending Inventoryat Base Year Retail Prices 104880 1.14 92000 Inventory Layers at Base Year Retail Prices 78000 x 1 x 75% 58500 84000 78000 6000 x 1.08 x 80% 5184 92000 78000 6000 8000 x 1.14 x 85.38 % 7787 Total ending inventory at dollar-value LIFO retail cost 71471