Chapter 09 Pre-Bult Problems Help Save&Ex; Check Raleigh Department Store uses t

Question

Chapter 09 Pre-Bult Problems Help Save&Ex; Check Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Avalable information follows: a. The Inventory at January 1, 2016, had a retail value of $47000 and a cost of $30,860 based on the conventional retail method b. Transactions during 2016 were as follows 10 points Gross purchases Purchase returns Purchase dincounts Groas sales Sales returns Enployee discounts Freight-in Net markups Net markdowns 301,860 $510,000 6,10012,000 5,200 476,000 8,000 Print 7,500 6,000 27.000 References 12,000 Sales to employees are recorded net of discounts c. The retail value of the December 31, 2017, inventory was $92,560, the cost-to-retail percentage for 2017 under the LIFO retail method was 65%, and the appropriate price index was 104% of the January 1, 2017, price level. d. The retail value of the December 31, 2018, inventory was $50290, the cost-to-retail percentage for 2018 under the LIFO retail method was 64%, and the appropriate price index was 107% of the January 1, 2017, price level Required: 1. Estimate ending inventory for 2016 using the conventional retail method. 2. Estimate ending inventory for 2016 assuming Raleigh Department Store used the LIFO retail method. 3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1,2017, Estimating ending inventory for 2017 and 2018. Complete this question by entering your answers in the tabs below Prev 13 of 14 Next >

Explanation / Answer

Solution:

1) Estimating the Ending Inventory for 2016 using the Conventional Retail Method:

2) Estimating the Ending Inventory for 2016 Assuming the Raleigh Department Store used the LIFO retail method:

Cost to Retail Percentage

($318,060 / $513,000 * 100)

3) Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2017. Estimating ending inventory for 2017 and 2018:

Cost Retail Cost to Retail Ratio Beginning Inventory $30,860 $47,000 Add: Purchases $301,860 $510,000 Freight In $27,500 Less: Purchase Returns ($6,100) ($12,000) Purchase Discounts ($5,200) Add: Net Markups $27,000 $572,000 Cost to Retail Percentage ($348,920 / $560,000 * 100) 62.00% Less: Net Markdowns ($12,000) Goods Available for Sale $348,920 $560,000 Less: Net Sales ($476,000 - $8,000) ($468,000) Employee Discounts ($6,000) Estimated Ending Inventory at Retail $86,000 Estimated Ending Inventory at Cost ($86,000 * 62%) $53,320

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