9-9 on january 1, 2016, HGC Camera store adopted the dollar value LIFO retail in
ID: 2475379 • Letter: 9
Question
9-9
on january 1, 2016, HGC Camera store adopted the dollar value LIFO retail inventory method. inventory transactions at both cost and retail and cost indexes for 2016 and 2017 are as follows
2016 2017
cost retail cost retail
begining inventory 28,000 40,000
net purchases 85,000 108,000 90,000 114,000
freight-in 2,000 2,500
net markups
net markdowns 10,000 8,000
net sales to customers 2,000 2,200
sales to employees (net of 20% discount) 100,000 104,000
price index 2,400 4,000
january 1 2016 retail 1.00
december 31, 2016 1.06
december 31 2017 1.10
required:
estimate the 2016 and 2017 ending inventory and cost of goods sold using the dollar value LIFO retail inventory method.
Explanation / Answer
2016 Cost Retail Beginning Invetory 28,000 40,000 Net Purchase 85,000 108,000 Frieght Inward 2,000 merchandise avialabe for sale 115,000 148,000 Add: markups 10,000 Less: mark down 2,000 Total 115,000 156,000 Cost to retail ratio (115000/156000) 73.72% Deduct Sales 100,000 Sales to emplyees (2000/80*100) 2,500 Inventory reatil Inventory Cost (53500*73.72%) 39,439 53,500 price index 1.06 1.06 Inventory at end 41,805 56,710 2017 Cost Retail Beginning Invetory 41,805 56,710 Net Purchase 90,000 114,000 Frieght Inward 2,500 merchandise avialabe for sale 134,305 170,710 Add: markups 8,000 Less: mark down 2,200 Total 134,305 176,510 Cost to retail ratio (134305/176510) 76.09% Deduct Sales 104,000 Sales to emplyees (4000/80*100) 5,000 Inventory reatil Inventory Cost (67510*76.09%) 51,368 67,510 price index 1.1 1.1 Inventory at end 56,505 74,261
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