On January 1 2018 HGC Camera Store adopted the dollarvalue L

On January 1, 2018, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2018 and 2019 are as follows: 2018 2019 Cost Retail Cost Retail $28,000 $40,000 Beginning inventory Net purchases Freight-Irn Net markups Net markdowns Net sales to customers Sales to employees (net of 20% discount) Price Index: 85,000 108,000 $90,000 $114,000 2,000 2,500 10,000 2,000 100,000 2,400 8,000 2,200 104,000 4,000 January 1, 2018 December 31, 2018 December 31, 2019 1.00 1.06 1.10 Required: Estimate the 2018 and 2019 ending inventory and cost of goods sold using the dollar-value LIFO retail inventory method.

Solution

Dollar Value LIFO Retail Method 2018 Cost Retail Beginning Inventory 28000 40000 Plus Net Purchases 87000 108000 Plus Net Markups 10000 Less Net Markdowns -2000 Goods Available for sales (Excluding beginning inventory) 87000 116000 Goods Available for sales (Including beginning inventory) 115000 156000 Base Year Cost to Retail Percentage 0.7 2018 Cost to Retail Percentage 0.75 Less Net Sales -102400 Estimated Current Inventory at Current year retail prices 53600 Estimated Ending Inventory At Cost -36400 Estimated Cost of Goods Sold 78600 Step 1 Step 2 Step 3 Ending Inventory Ending Inventory Inventory Layers Inventory Layers at Year End at Base Year at Base Year Converted to Retail Prices Retail Prices Retail prices Cost 53600 50566 40000 28000 10566 8400 Total Ending Inventory at Dollar Value LIFO Retail Cost 36400 2019 Cost Retail Beginning Inventory 36400 53600 Plus Net Purchases 92500 114000 Plus Net Markups 8000 Less Net Markdowns -2200 Goods Available for sales (Excluding beginning inventory) 92500 119800 Goods Available for sales (Including beginning inventory) 128900 173400 Base Year Cost to Retail Percentage 0.68 2018 Cost to Retail Percentage 0.77 Less Net Sales -108000 Estimated Current Inventory at Current year retail prices 65400 Estimated Ending Inventory At Cost -44923 Estimated Cost of Goods Sold 83977 Step 1 Step 2 Step 3 Ending Inventory Ending Inventory Inventory Layers Inventory Layers at Year End at Base Year at Base Year Converted to Retail Prices Retail Prices Retail prices Cost 65400 61698 40000 27164.18 21698 17759 Total Ending Inventory at Dollar Value LIFO Retail Cost 44923