Question

On January 1, 2018, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2018:

	Cost		Retail
Beginning inventory	$	73,150	$	133,000
Net purchases		113,400		257,000
Net markups				8,000
Net markdowns				13,000
Net sales				224,000
Retail price index, 12/31/18				1.12

Required:
Calculate the estimated ending inventory and cost of goods sold for 2018.

	Ending inventory at retail Ending inventory at cost Cost of goods sold

Answer 1

Ans-Calculating the estimated ending inventory and cost of goods sold for 2018:-

	Cost	Retail
Beginning Inventory	73,150	133,000
Add: Net Purchases	113,400	257,000
Add: Net Markups		8,000
Less: Net Markdowns		(13,000)
Goods Available for Sale (excluding beginning inventory)	113,400	252,000
Goods Available for Sale (including beginning inventory)	186,550	385,000
Less: Net Sales		(224,000)
Estimated Ending Inventory at current year retail prices		161,000

Base year cost to retail percentage= $73,150/ $133,000 = 55%

2018-Cost to retail percentage= $113,400/ $252,000 =45%

Retail Price as on Jan.1,2018 161,000/1.12	143,750
Less: Beginning Inventory	133,000
Balance	10,750

10,750*1.12 *45% (2018 ratio)	5,418
Add: Cost of Beginning inventory	73,150
Total Cost of Ending Inventory (LIFO)	78,568

Cost of Goods Sold:-

Cost of Total Inventory (73,150+113,400)	$186,550
Less: Cost of Ending Inventory (LIFO)	$78,568
Cost of Goods Sold	$107,982

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