lance hefner specialty shoppes decided to use the dollar value LIFO retail metho
ID: 2472240 • Letter: L
Question
lance hefner specialty shoppes decided to use the dollar value LIFO retail method to value its inventory. accounting records provide the following information
cost retail
merchandise inv jan 1,2016 160,000 250,000
net purchases 350,200 510,000
net markups 7,000
net markdowns 2,000
net sales 380,000
pertinate retail price indexs are as follows
january 1, 2016 1.00
december 31, 2016 1.10
required
determine ending inventory and cost of goods sold
Explanation / Answer
Particulars
Cost
Retail
Beginning Inventory
$ 160,000
$ 250,000
Plus: Net Purchases
$ 350,200
$ 510,000
Net Markups
$ 7,000
Less: Net Markdowns
$ (2,000)
Goods available for sale(Excluding beginning Inventory)
$ 350,200
Goods available for sale(including beginning Inventory)
$ 510,200
$ 765,000
Less: Net Sales
$ (380,000)
Estimated ending inventory at current year retail process
$ 385,000
Base Layer Cost - retail percentage
$160,000
64%
$250,000
Base Layer Cost - retail percentage
$350,200
68%
$515,000
Ending inventory at Base year Retail Price
$385,000/1.1
$ 350,000
350,000 has two prices
250,000 x 1.1 x 64%
$160,000
150,000 x 1 x 68%
$74,800
ending Inventory at LIFO
$234,800
Particulars
Cost
Retail
Beginning Inventory
$ 160,000
$ 250,000
Plus: Net Purchases
$ 350,200
$ 510,000
Net Markups
$ 7,000
Less: Net Markdowns
$ (2,000)
Goods available for sale(Excluding beginning Inventory)
$ 350,200
Goods available for sale(including beginning Inventory)
$ 510,200
$ 765,000
Less: Net Sales
$ (380,000)
Estimated ending inventory at current year retail process
$ 385,000
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