1. Western Company, which uses the retail LIFO method to determine inventory cos
ID: 2543810 • Letter: 1
Question
1. Western Company, which uses the retail LIFO method to determine inventory cost, has provided the following information for 2018:
Cost Retail
Inventory, 1/1/18 $ 125,750 $225,000
Net purchases 363,280 650,000
Net markups 55,000
Net markdowns 35,000
Net sales 530,000
What is the cost of Western's inventory at December 31, 2018?
2.East Corporation’s computation of cost of goods sold is:
1/1/2018 inventory $ 50,000
12/31/2018 inventory 80,000
Cost of goods purchased 475,000
Explanation / Answer
1 Part1: Estimation of Ending Inventory and Cost of Goods Sold Using the Retail Inventory Method and Avarage Cost Cost Retail Beginning Inventory 125750 225000 Add: Purchases 363280 650000 Add: Mark Ups 55000 Less: Mark Downs 35000 Goods Available for Sales 489030 895000 Cost/Retail%= 489020/895000 54.64% Cost Retail Cost of Goods Available for Sales 489030 895000 -Sales 530000 Ending Inventory 365000 X Cost to Retail Percentage 54.64% Ending Inventory 199433 (365000*54.64%) 2 Beginning Inventory 50000 Add: Purchases 475000 Goods Available for Sales 525000 Less: Ending Inventory 80000 Cost of Goods Sold 445000
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