The following data concerning the retail inventory method are taken from the fin
ID: 2544643 • Letter: T
Question
The following data concerning the retail inventory method are taken from the financial records of Blake Company.
Cost Retail
Beginning inventory $132,000 $ 220,000
Purchases 362,500 550,000
Freight-in 16,000 —
Net markups — 45,000
Net markdowns — 16,000
Sales — 625,000
a.) What is the ending inventory at retail?
b.) If the ending inventory is to be valued at approximately the conventional retail inventory method, the calculation of the cost to retail ratio should be based on goods available for sale at:(1) cost(dollar amount) and (2) retail(dollar amount)
c) What is the cost of ending inventory using the FIFO cost method?
d.) What is the cost of ending inventory using the LIFO Retail Method?
Explanation / Answer
a. Ending year inventory at retail = 174000
b. cost to retail ratio = 510500/799000 = 63.89%
c. Cost of ending inventory using FIFO cost = 174000*63.89% = 111,172.72
d.Since the year end inventory at retail is lower than the opening inventory at retail, there is no layer for the current year under LIFO Retail method. Therefore, ending inventory at LIFO retail = 174000
Cost Retail Purchases 362500 550000 Freight-in 16000 Markups 45000 Mark Downs 16000 total 378500 579000 Add: Beginning Inventory 132000 220,000 Goods available for sale 510500 799000 Sales- at retail 625000 Ending year inventory at retail 174000Related Questions
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