On January 1, 2013, the Brunswick Hat Company adopted the dollar-value LIFO reta

Question

On January 1, 2013, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2013:

Calculate the estimated ending inventory and cost of goods sold for 2013. (Do not round your intermediate calculations.)

On January 1, 2013, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2013:

On January 1, 2013, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2013: Calculate the estimated ending inventory and cost of goods sold for 2013. (Do not round your intermediate calculations.)

Explanation / Answer

  Retail
Beginning inventory                               130,000
Add : net purchases                               253,000
Add : Net Mark-ups 7,000
Less : Net Mark-downs                        10,000
Total                                                    380,000
Less : net sales -      237,000
Ending inventory                                   143,000

Cost of ending inventory
Cost to retail ratio(base)    = 65,000 / 130,000 = 50%
Cost to retail ratio (2013)   = 100,000 / 253,000 = 39.5%

Retail price as on Jan 1, 2013 = 143,000 / 1.04 = 137,500
Less : Beginning inventory                                   130,000
Balance   7500

7500 x 1.04 x 39.5%(2013 ratio)    = 3081
Add Cost of beginning inventory 65000
Total cost of ending inventory (LIFO)                68081

Cost of goods sold
Cost of total inventory (65000 + 100000)            165,000
Less : Cost of ending inventory (LIFO)                  68081
Cost of goods sold                                           96,919

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