%3Cp%3E%3Cspan%20class%3D%22c1%22%3ECaleb%20Company%20uses%20the%20Retail%20Inve

Question

%3Cp%3E%3Cspan%20class%3D%22c1%22%3ECaleb%20Company%20uses%20the%20Retail%20Inventory%20method%0Ato%20determine%20inventory%20cost%20for%20financial%20%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3Ereporting%20purposes.%20They%20have%20provided%20you%20with%0Athe%20following%20information%20for%202014%3A%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BCost%20Retail%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BInventory%2C%201%2F1%2F10%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%0A%26nbsp%3B%20%26nbsp%3B%20%24110%2C000%20%24160%2C000%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BNet%20purchases%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%0A%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20378%2C000%20%26nbsp%3B%20%26nbsp%3B562%2C000%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BNet%20markups%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%0A%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%2068%2C000%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BNet%20markdowns%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%0A%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%2030%2C000%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BNet%20sales%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%0A%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%20%26nbsp%3B%0A%26nbsp%3B508%2C000%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3B%3C%2Fspan%3E%3C%2Fp%3E%0A%3Cp%3E%3Cspan%20class%3D%22c1%22%3E%26nbsp%3BWhat%20is%20the%20cost%20of%20Caleb%E2%80%99s%20inventory%20at%0ADecember%2031%2C%202014%20based%20on%20FIFO%2C%20LCM%3F%3C%2Fspan%3E%3C%2Fp%3E%0A

Explanation / Answer

FIFO LCM Cost Retail Cost Retail Inventory, 1/1/10 110000 160000 110000 160000 Net purchases 378000 562000 378000 562000 488000 722000 488000 722000 Net markups 68000 722000 790000 Cost percentage FIFO (378000 / 562000) = 67.26% LCM (488000 / 790000) = 61.77% Net markups 68000 Net markdowns 30000 30000 Good Available for sale 760000 760000 Net sales 508000 508000 Inventory at retail 252000 252000 Inventory at estimated Cost FIFO ( 67.26%*252000)    169,495.20 LCM ( 61.77% * 252000)    155,660.40

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