Crosby Company owns a chain of hardware stores throughout the state. The company

Question

Crosby Company owns a chain of hardware stores throughout the state. The company uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the three months ending March 31, 2018 Retail $280,000 $367,000 907,000 19,000 2,000 900,000 Cost Beginning inventory Net purchases Net markups Net markdowns Net sales 693,000 Required: Complete the table below to estimate the LIFO cost of ending inventory and cost of goods sold for the three months ending March 31, 2018. Assume stable retail prices during the period Answer is not complete. Cost-to- Retail Ratio Cost Retail Beginning inventory Plus: Net purchases 280,000$ 367,000 693,000 907,000 Net markups 19,000? 2,000 924,000 1,291,000 Less: Net markdowns Goods available for sale (excluding beg invent 693,000 Goods available for sale (including beg inven 973,000 Cost-to-retail percentage 75% 900,000 Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

Explanation / Answer

Cost Retail Goods available for sale (inc. beg. Inventory) 973,000 1,291,000 Less Net Sales 900,000 Estimated ending inventory at retail 391,000 Estimated ending inventory at Cost (a) Retail Cost Beginning Inventory b= c-a 367,000 280,000 Current Periods layer (c ) 24,000 X 75% = 18000 Total 391000 298,000 (298000) Estimate Cost of Goods Sold 675000

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