On January 1, 2016, Sanderson Variety Store adopted the dollar-value LIFO retail

Question

On January 1, 2016, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method Accounting records provided the following information: Cost Retail Beginning inventory Net purchases Net markups Net markdowns Net sales Retail price index, end of year $ 56,000 80,000 330,000 6,000 8,000 307,000 1.02 223,040 Calculate the inventory value at the end of the year using the dollar-value LIFO retail method. (Round you intermediate calculations to the nearest whole dollar.) Cost-to-retail ratio Cost Retail 56,000 $ 223,040 80,000 330,000 6,000 8,000 328,000 408,000 Beginning inventory Plus: Net purchases Net markups 0 223,040 279,040 Less: Net markdowns Goods available for sale (excluding beginning inventory) Goods available for sale (including beginning inventory) 70% Base layer cost-to-retail percentage 2016 layer cost-to-retail percentage 68% Less: Net sales Estimated ending inventory at current year retail prices Estimated ending inventory at cost Estimated cost of goods sold 307,000 101,000

Explanation / Answer

Working Note :-

Ending Inventory at base year retail prices = $101000 / 1.02 = $99020

Inventory Layers at base year Retail Prices :-

Base = $80000

2016 = $99020 - $80000 = $19020

Inventory Layers Converted to Cost :-

Base = $80000*1*70% = $56000

2016 = $19020*1.02*68% = $13192

Total Ending Inventory at dollar value LIFO retail cost = $56000 + $13192

= $69192

Particulars Cost Retail Cost to Retail Ratio Beginning Inventory $56000 $80000 Plus : Net Purchases $223040 $330000 Net Markups $6000 Less : Net Markdowns ($8000) Goods Available for sale (Excluding beginning inventory) $223040 $328000 Goods Available for sale (Including beginning inventory) $279040 $408000 Base layer cost to retail percentage ($56000/$80000) 70% 2016 layer cost to retail percentage ($223040/$328000) 68% Less : Net Sales (307000) Estimated Ending inventory at current year retail prices 101000 Less : Estimated ending inventory at cost (Working Note) (69192) Estimated Cost of goods sold 209848

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