Flounder Company began operations on January 1, 2016, adopting the conventional
ID: 2543516 • Letter: F
Question
Flounder Company began operations on January 1, 2016, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2016 and, because there was no beginning inventory, its ending inventory for 2016 of $37,300 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2017, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2017, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.
Inventory, Jan. 1, 2017 cost:$37,300 retail:$60,100
Markdowns (net) retail:12,900
Markups (net) retail:22,100
Purchases (net) cost:128,800 retail:178,800
Sales (net) retail:169,300
Determine the cost of the 2017 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to 2 decimal place, e.g. 78.72% and final answers to 0 decimal places, e.g. 28,987.)
(a) Ending inventory using conventional retail method $
(b) Ending inventory LIFO retail method $
Explanation / Answer
Cost Retail Cost to Retail Percentage Inventory January 1. 2017 37300 60100 Add : Purchases at cost 128800 178800 Goods available for sale 166100 238900 69.53 % Sales 169300 Ending Inventory at retail prices 69600 Ending Inventory at cost =69600*69.53% 48392.88 So Ending Inventory using conventional retail method is 48392.88 Ending Inventory using LIFO method Cost Retail Inventory January 1. 2017 37300 60100 Add : Purchases at cost 128800 178800 Goods available for sale 166100 238900 Sales 121956.6 169300 Ending Inventory at cost using LIFO method is 44143.4 =(128800-121956.6+37300)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.