Smith-Kline Company maintains inventory records at selling prices as well as at

Question

Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2018, the records indicate the following data: (S in 000s) cost Retai $91 $ 130 770 1,007 Beginning inventory Purchases Freight-in on purchases Purchase returns Net markups Net markdowns Net sales 31 917 Required: Assuming the price level increased from 1 at January 1 to 1.15 at December 31, 2018, use the dollar-value LIFO retail method to approximate cost of ending inventory and cost of goods sold. (Do not round intermediate calculations. Round final answers to the nearest whole dollar. Enter your answers in thousands.) $ in 000s) Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Explanation / Answer

1)Estimated ending inventory at retail- 403

2)Estimated ending inventory at cost-69

3)Estimated cost of goods sold-955

Working Notes:

1)Net Sales- 917

Net Markup= Markdown- Markup

= 9-5=4 thus the Sale price is at 96 of the cost=917/96*100=955.21

Opening stock of retail= 130

Purchases=1007,Purchase return=3

Opening Stock+Purchases=130+1004=1134 is at 1 so increase in price to 1.15

Revised cost=1134*1.15=1304.1.

Net Markup= Markdown- Markup

= 9-5=4 thus the retail price is at 96 of the cost

This is after adjusting Markup and Markdown. Cost before Markup and markdown

   =1304.1/96*100=1358.44

Cost of goods sold=Opening stock+Purchases-Closing Stock

Closing Stock=1358.44-955.21=403.23 rounded off to 403

2)Opening Stock+Purchases+ Direct Expenses-Purchase return=91+770+31-1=891

This is at 1 now the price increased to 1.15 revised cost=891*1.15=1024.65

Sales after adjusting markup and markdown=917/96*100=955.21

Estimated inventory at end=1024.65-955.21=69.44 rounded off to 69

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.