Pharoah Inc. had beginning inventory of $12,017 at cost and $19,700 at retail. N

Question

Pharoah Inc. had beginning inventory of $12,017 at cost and $19,700 at retail. Net purchases were $112,000 at cost and $174,400 at retail. Net markups were $9,100, net markdowns were $7,400, and sales revenue was $160,500. Assume the price level increased from 100 at the beginning of the year to 105 at year-end. Compute ending inventory at cost using the dollar-value LIFO retail method. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using the dollar-value LIFO retail method $

Explanation / Answer

Solution:

Retail Inventory method - LIFO Particulars Cost Retail Purchases $112,000.00 $174,400.00 Net additional markups $9,100.00 Net markdowns -$7,400.00 Total (A) $112,000.00 $176,100.00 Cost to retail ratio for Purchases (112000/176100) 0.636 Beginning Inventory (B) $12,017.00 $19,700.00 Goods Available for Sale (A+B) $124,017.00 $195,800.00 Less: Sales $160,500.00 Ending inventory at retail $35,300.00 Ending inventory at LIFO Cost
[($12,017 + ($35,300 - $19,700)*0.636] $21,939

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