Homework SourseOn January 1 2018 Sanderson Variety Store adopted the dollar
On January 1, 2018, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records provided the following information:
Estimate ending inventory using the dollar-value LIFO retail method.
| Cost | Retail | |||||
| Beginning inventory | $ | 52,500 | $ | 75,000 | ||
| Net purchases | 206,040 | 305,000 | ||||
| Net markups | 7,000 | |||||
| Net markdowns | 9,000 | |||||
| Net sales | 282,000 | |||||
| Retail price index, end of year | 1.04 | |||||
Solution
Answer
Estimated ending inventory at cost
96000 / 1.04 = 92307
75000*1.00*70% = 52500
(96000 - 75000) * 1.04 * 67% = 14633
Estimated ending inventory at cost = 52500 - 14633 = 37867
| particulars | Cost | Retail | Cost to Retail ratio |
| Beginning Inventory | 52500 | 75000 | |
| Plus: Net Purchases | 206040 | 305000 | |
| Net Markups | 7000 | ||
| Less: Net Markdowns | 9000 | ||
| Goods available for sale (excluding beginning inventory) | 206040 | 305000 | |
| Goods available for sale (including beginning inventory) | 258540 | 378000 | |
| Base Layer Cost toretail percentage 52500/75000 | 70% | ||
| Layer cost to retail percentage206040/305000 | 67% | ||
| Less: Net Sales | 282000 | ||
| Estimated ending inventory at current year retail prices | 96000 | ||
| Estimated ending inventory at cost | 37867 | ||
| Estimated cost of goods sold | 220673 | ||
