Question

Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information:

	Cost			Retail
Merchandise inventory, January 1, 2018	$	192,000		$	320,000
Net purchases		371,200			575,000
Net markups					14,000
Net markdowns					9,000
Net sales					460,000

Related retail price indexes are as follows:

January 1, 2018	1.00
December 31, 2018	1.10

Required:

Ending inventory at retail:____

Ending inventory at cost:____

Cost of Goods sold:____

Answer 1

Ending Inventory at Retail	$440,000
Ending Inventory at Cost	$248,320
Cost of Goods Sold	$314,880

--Working

	Cost	Retail	Cost to retail %
Beginning Inventory	$192,000	$320,000	60.000%
Net Purchases	$371,200	$575,000
Net Mark ups		$14,000
Net Mark downs		($9,000)
Purchases	$371,200	$580,000	64.000%
Goods available for sale	$563,200	$900,000
Net Sales		($460,000)
Ending Inventory at Retail		$440,000
Ending Inventory at Cost	($248,320)
Cost of Goods Sold	$314,880

	Step 1	Step 2	Step 3
Ending Inventory at Year end retail prices	Ending Inventory at Year end BASE YEAR retail prices	Inventory Layer at base year retail prices	Inventory Layers converted to cost
$440,000	$400,000	$320,000	$192,000	[320000 x 60% x 1.0]
	[ 440000 / 1.1 ]	$80,000	$56,320	[80000 x 64% x 1.10]
Total ending Inventory at dollar value LIFO retail cost			$248,320