Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting...

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	$	182,000	$	280,000
Net purchases		372,600		535,000
Net markups				10,000
Net markdowns				5,000
Net sales				400,000

Related retail price indexes are as follows:


January 1, 2018	1.00
December 31, 2018	1.20

Required:
Determine ending inventory and cost of goods sold.

Ending Inventory at retail
Ending Inventory at cost
COGS

Solutions

Expert Solution

Solution:

Lance Hefner Specialty Shoppes
	Cost	Retail	Cost to Retail ratio
Beginning Inventory	182000	280000
Net Purchases	372600	535000
Add: Net Markups		10000
Less: Net Markdowns		-5000
Goods Available for Sale (excluding beginning inventory)	372600	540000
Goods Available for Sale (including beginning inventory)	554600	820000

Cost-to-retail Percentage ($385000/550000)			69.00%
Net Sales		-4,00,000.00
Ending Inventory at Retail		4,20,000
Ending Inventory at Cost	239960
Cost of goods sold	314640

Dollar-Value LIFO Retail Method
Ending Inventory at Year-end Retail Prices	Ending Inventory at Base Year Retail Prices	Inventory Layers at Base Year Retail Prices	Inventory Layers Converted to Cost
4,20,000	350000	2,80,000.00	182000
		70,000.00	57960
Total Ending Inventory at dollar-value LIFO retail Cost	239960

hence,

Ending inventory at retail	420000
Ending Inventory at Cost	239960
Cost of goods sold	314640

ekkarill92 answered 2 years ago

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