Question

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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 $240,000 608,000 Beginning inventory Net purchases Net markups Net markdowns Net sales Retail $363,000 788,000 14,000 2,000 780,000 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

LIFO Cost of ending inventory and cost of goods sold :- Particulars Cost $ Retail $ Cost to retail Ratio 240,000 608,000 363,000 788,000 14,000 (2,000) Beginning Inventory Plus :- Purchases (net) Add: Net markups Deduct: Net markdowns Cost of goods available for sale (excluding beginning inventory) Cost of goods available for sale (including beginning inventory) (A) 608,000 800,000 848,000 1,163,000 Cost to retail ratio = (608000/800000)*100 76.00% 780,000 383,000 Deduct: Sales (net) Estimated ending inventory at retail Ending inventory at cost (B) Cost of goods sold (A-B) 255,200 592,800 Prior year cost to retail %= (240000/363000)*100 Prior year cost to retail % = 66.12% Cost Estimated ending inventory at cost : Particulars Beginning inventory Current periods layer (383000-363000)*76% Total Retail 363,000 240,000 15,200 363,000 255,200