alquist company uses the retail method to estimate it’s ending inventory. Select
ID: 2592656 • Letter: A
Question
alquist company uses the retail method to estimate it’s ending inventory. Selected information about it’s 2018 your operations is as follows;Find: (conventional and LIFO)
Ending inventory at retail Ending inventory at cost Cost of goods sold Alquist Company uses the retail method to estimate its ending Inventory Selected information about its year 2018 operations is as follows a. January 1, 2018, beginning inventory had a cost of $234.000 and a retail value of $280,000. b. Purchases during 2018 cost $1,813,000 with an original retail value of $3.020,000 C. Freight costs were $23,000 for incoming merchandise d. Net additional markups were S e. Based on prior experience, shrinkage due to shoplifting was estimated to be $28.000 of retail value f Merchandise is sold to employees ata 20%of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $380.000 g Sales to customers totaled $2.100,000 for the year Required 1. Estimate ending inventory and cost of goods sold using the conventional retail method. 2. Estimate ending inventory and cost of goods sold using the LIFO retail method (Assume stable prices) (For all requirements, Round your intermediate calculations and final answers to whole dollars.) Conventional LIFO Retail Retail Method Method Estimated ending inventory at retail s 396 o 6.000
Explanation / Answer
Alquist Company LIFO RETAIL METHOD Particular Cost Retail Beginning Inventory $2,34,000.00 $2,80,000.00 Add - Purchase $18,13,000.00 $30,20,000.00 Freight Cost $23,000.00 Net Add. Markup $1,50,000.00 Less - Net Markdown -$4,70,000.00 Goods Available for sale Excluding Beginning Inventory $18,36,000.00 $27,00,000.00 Goods Available for sale Including Beginning Inventory $20,70,000.00 $29,80,000.00 Cost to Retail % 69.00% Less - Shrinkage due to shortlifting -$28,000.00 Less - Sales to Costumer -$21,00,000.00 Sales to Employee -$3,80,000.00 Employee Discount -$76,000.00 Estimated ending inventory at retail $3,96,000.00 Estimated ending inventory at Cost Beginning Inventory $2,34,000.00 $2,80,000.00 Current years layer ( 69% of retail ) $80,040.00 $1,16,000.00 Estimated Ending Inventory $3,14,040.00 $3,96,000.00 Estimated Cost of Goods Sold $17,55,960.00
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