Raleigh Department Store converted from the conventional retail method to the LI
ID: 2345915 • Letter: R
Question
Raleigh Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2009, and is now considering converting to the dollar-value LIFO retail inventory method. Management requested, during your examination of the financial statements for the year ended December 31, 2011, that you furnish a summary showing certain computations of inventory costs for the past three years. Available information follows:a. The inventory at January 1, 2009, had a retail value of $44,780 and a cost of $26,498 based on the conventional retail method.
b. Transactions during 2009 were as follows:
Cost Retail
Gross purchases $ 282,340 $ 490,450
Purchase returns 6,100 9,900
Purchase discounts 4,800
Gross sales 492,450
Sales returns 5,000
Employee discounts 3,100
Freight-in 27,200
Net markups 25,700
Net markdowns 9,100
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Sales to employees are recorded net of discounts.
c. The retail value of the December 31, 2010, inventory was $55,975, the cost-to-retail percentage for 2010 under the LIFO retail method was 64%, and the appropriate price index was 102% of the January 1, 2010, price level.
d. The retail value of the December 31, 2011, inventory was $45,700, the cost-to-retail percentage for 2011 under the LIFO retail method was 63%, and the appropriate price index was 105% of the January 1, 2010, price level.
Required:
(1) Calculate estimated ending inventory at cost and retail, based on the conventional retail method. (Round the cost-to-retail percentage to whole percent (e.g. 12%) for calculation purposes. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)
Estimated ending inventory at cost $
Estimated ending inventory at retail $
(2) Calculate estimated ending inventory at cost and retail, based on the LIFO retail method. (Round the cost-to-retail percentage to whole percent (e.g. 12%) for calculation purposes. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)
Estimated ending inventory at cost $
Estimated ending inventory at retail $
(3) Calculate 2010 and 2011 total ending inventory at dollar-value LIFO retail method. (Do not round the cost-to-retail percentage. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)
Total ending inventory at dollar-value LIFO retail cost, 2010 $
Total ending inventory at dollar-value LIFO retail cost, 2011 $
Explanation / Answer
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