Part V 16 Points Retail Inventory Method When you undertook

Part V. (16 Points) Retail Inventory Method When you undertook the preparation of the annual financial statements for Smokey, Inc. at December 31, 2017, the following data were available: At Cost $145,600 At Retail Inventory, January 1, 2017 Purchases, net Markups, net Markdowns, net Net Sales $197,000 577,000 430,400 126,000 30,000 670,000 Compute the estimated ending inventory at cost as of December 31, 2016, using the retail method which approximates lower of cost or market Your solution should be in good form with all amounts clearly labeled. REQUIRED:

Solution

Dollar value LIFO retail method 2017 Cost retail Ratio Beginning inventory 145600 197000 Purchases 430400 577000 Net markups 126000 Less Net mark downs -30000 Cost of goods available for sale 576000 870000 66% Less Sales 670000 Ending inventory 200000 X cost to retail ratio 0.66 Ending inventory 132414