Exercise 9-28 Sweet Corporation began operations on January 1, 2017, with a begi

Question

Exercise 9-28 Sweet Corporation began operations on January 1, 2017, with a beginning inventory of 20,052 at cost and?50 200 at retail. The following information relates to 2017 Retail Net purchases ($110,000 at cost) Net markups Net markdowns Sales revenue 10,200 5,000 127,900 Assume Sweet decided to adopt the conventional retail method. Compute the ending inventory to be reported in the balance sheet. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answer to o decimal places, e.g. 28,987-) Ending inventory using the conventional retail method Assume instead that Sweet decides to adopt the dollar-value LIFO retail method. The appropriate price indexes are 100 at January 1 and 110 at December 31. Compute the ending inventory to be reported in the balance sheet. (Round ratios for computational purposes to 2 decimal places, e.g. 78.72% and final answer to 0 decimal places, e.g. 28,987.) Ending inventory using the dollar-value LIFO retail method on the basis of the information n part b compute cost of goods sold Round ratios for computational purposes to 2 decimal places, eg. 78.72% and final answer to 0 decimal places, eg. 28,987. Cost of goods sold using the dollar-value LIFO retail method

Explanation / Answer

Part A

Ending inventory at cost = 48983

Part B

Ending inventory at retail (base year) =80300/1.10 =73000

Cost-to-retail ratio for new layer =

(110000/158000) =69.62%

Ending inventory

Base Layer = 50200*1.00*39.94% =20050

(20052/50200=39.94%)

New layer =(73000-50200)*1.10*69.62% =17461

Total ending inventory (20050+17461) = 37511

Part C

Cost of goods available for sale.................... 130052

Ending inventory in part B...............................37511

Cost of goods sold......................................... 92541

Cost retail Beginning inventory 20052 50200 Net Purchases 110000 152800 Net markups 10200 Total 130052 213200 Net markdowns (5000) Sales revenue (127900) Ending inventory at retail 80300 Cost - retail ratio = 61% (130052/213200) Ending inventory at cost (80300*61%) 48983

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