Aldrin Antiques uses a periodic inventory system and the LIFO retail method to e

Question

Aldrin Antiques uses a periodic inventory system and the LIFO retail method to estimate its ending inventories. The following data has been summarized for December 31, 2016:

Cost Retail Inventory, January 1 cost116,000 retail 165,000

Purchases cost 355,000 retail 540,000

Net markups retail 15,600

Net markdowns retail 9,800

Net sales retail 522,000

Estimate the LIFO cost of ending inventory and cost of goods sold. Prices have been stable throughout the period. NOTE: • Round percentages to two decimal places. • Round dollar amounts to the nearest dollar.

Explanation / Answer

Cost Retail Beginning inventory -January 1, 2016 116000 165000 Purchases 355000 540000 Net markups retail 15600 Net markdowns retail -9800 Total excluding beginning inventory 355000 545800 Total including beginning inventory 471000 710800 Net Sales during the period -522000 Ending inventory at retail 188800 Cost to retail % under LIFO = 355000/545800 = 65.04% Layers @ Cost to Ending Ending inventory: retail prices retail % LIFO cost Layer 2015 165000 70.30% 116000 Layer 2016 23800 65.04% 15480 LIFO cost of enidng inventory 131480 LIFO cost of goods sold = 471000 - 131480 = 339520

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