Question

Required information (The following information applies to the questions displayed below.) Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows: a. The inventory at January 1, 2019, had a retail value of $53,000 and a cost of $36,930 based on the conventional retail method. b. Transactions during 2019 were as follows: Cost $327,870 6,700 5,800 Retail $570,000 18,000 Gross purchases Purchase returns Purchase discounts Gross sales Sales returns Employee discounts Freight-in Net markups Net markdowns 568,000 7,500 2,000 30,500 33,000 18,000 Sales to employees are recorded net of discounts. c. The retail value of the December 31, 2020, inventory was $61,880, the cost-to-retail percentage for 2020 under the LIFO retail method was 70%, and the appropriate price index was 104% of the January 1, 2020, price level. d. The retail value of the December 31, 2021, inventory was $53,500, the cost-to-retail percentage for 2021 under the LIFO retail method was 69%, and the appropriate price index was 107% of the January 1, 2020, price level.

Answer 1

Statement showing The Estimated Ending inventory of 2019 as per Retail conventional Method

Particulars	Cost ($)	Retail ($)	Cost to retail ratio
Begining Inventory jan 2019	36930	53000
add Purchase	327870	570000
add freight	30500
Less Purchase return	-6700	-18000
Less Purchase discounts	-5800
add net markup		33000
goods available for sale	382800	638000	382800/638000 *100=60%
Less Net sales (gross - sales return)		-560500
(568000-7500)
less mark down		-18000
less employess discount		-2000
Estimated ending Inventory at retail		57500
Estimated Ending Inventory for 2019 at cost 57500*60%	34500