Raleigh Department Store converted from the conventional retail method to the LI
ID: 2460847 • Letter: R
Question
Raleigh Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2014, and is now considering converting to the dollar-value LIFO retail inventory method. Management requested, during your examination of the financial statements for the year ended December 31, 2016, that you furnish a summary showing certain computations of inventory costs for the past three years. Available information follows:
The inventory at January 1, 2014, had a retail value of $29,000 and a cost of $21,000 based on the conventional retail method.
The retail value of the December 31, 2015, inventory was $40,040, the cost-to-retail percentage for 2015 under the LIFO retail method was 71%, and the appropriate price index was 104% of the January 1, 2015, price level.
The retail value of the December 31, 2016, inventory was $37,450, the cost-to-retail percentage for 2016 under the LIFO retail method was 70%, and the appropriate price index was 107% of the January 1, 2015, price level.
Prepare a schedule showing the computation of the cost of inventory at December 31, 2014, based on the conventional retail method. (Amounts to be deducted should be indicated by a minus sign.)
Prepare a schedule showing the computation of the cost of inventory at December 31, 2014, based on the LIFO retail method.
Calculate the cost of inventory for December 31, 2015 and 2016, based on the dollar-value LIFO retail method.
Raleigh Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2014, and is now considering converting to the dollar-value LIFO retail inventory method. Management requested, during your examination of the financial statements for the year ended December 31, 2016, that you furnish a summary showing certain computations of inventory costs for the past three years. Available information follows:
Explanation / Answer
Answer:1
Answer:2
Answer:3
Total ending inventory at dollar value LIFO retail method for december 31, 2015: (40040/1.04)*0.71 = $27335
Total ending inventory at dollar value LIFO retail method for december 31, 2016: (37450/1.07)*0.70 = $24500
Schedule of cost of inventory using conventional retail method Particulars Cost Retail Cost to retail ratio Beginning inventory $ 21,000.00 $ 29,000.00 Purchases(+) $ 3,42,000.00 $ 5,82,500.00 Freight- in (+) $ 20,000.00 $ - Net markups (+) $ - $ 17,000.00 Purchase returns (-) $ 4,500.00 $ 6,000.00 Net markdowns (-) $ - $ 6,000.00 Purchase discounts (-) $ 5,000.00 $ - Goods available for sales $ 3,73,500.00 $ 6,16,500.00 Cost to retail percentage 61% Net sales (-) (gross - return) $ - $ 5,77,500.00 Employee discounts (-) $ - $ 3,000.00 Estimated ending inventory retail $ 36,000.00 Estimated ending inventory at cost(36000*61%) $ 21,810.22Related Questions
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