Question
In: Accounting
On January 1, 2018, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following...
On January 1, 2018, the Brunswick Hat Company adopted the
dollar-value LIFO retail method. The following data are available
for 2018:
| Cost | Retail | |||
| Beginning inventory | $ | 81,000 | $ | 150,000 |
| Net purchases | 121,500 | 278,000 | ||
| Net markups | 8,000 | |||
| Net markdowns | 16,000 | |||
| Net sales | 228,000 | |||
| Retail price index, 12/31/18 | 1.20 | |||
Required:
Calculate the estimated ending inventory and cost of goods sold for
2018.
Solutions
Expert Solution
| Ans. | Particulars | Cost | Retail |
| Beginning inventory | 81000 | 150000 | |
| Add: Net purchases | 121500 | 278000 | |
| Add: net markups | 8000 | ||
| Less: net markdowns | -16000 | ||
| Goods available for sale (excluding beginning inventory) | 121500 | 270000 | |
| Goods available for sale (including beginning inventory) | 202500 | 420000 | |
| Less: net sales | -228000 | ||
| Estimated ending inventory at current year retail prices | 192000 | ||
| Estimated ending inventory at cost | 86400 | ||
| Estimated cost of goods sold (202500 - 86400) | 116100 | ||
| Base year cost-to-retail percentage = 81000 / 150000 * 100 | |||
| 54% | |||
| 2018 cost-to-retail percentage = 121500 / 270000 * 100 | |||
| 45% | |||
| *Calculation of estimated ending inventory at cost: | |||
| Ending inventory at retail price = 192000 | |||
| Ending inventory at base year retail price = Ending inventory at retail / price index | |||
| 192000 / 1.20 | |||
| 160000 | |||
| Inventory layers at base year retail prices: (converted to cost) | |||
| 150000 * 1 * 54% | 81000 | ||
| (160000-150000) * 1.20 * 45% | 5400 | ||
| Total ending inventory at cost | 86400 | ||
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2018, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following...
On January 1, 2018, the Brunswick Hat Company adopted the
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On January 1, 2018, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following...
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the Brunswick Hat Company adopted the dollar-value LIFO retail
method. The following data are available for 2018:
Cost
Retail
Beginning
inventory
$
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$
141,000
Net
purchases
129,500
264,000
Net markups
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Net
markdowns
10,000
Net sales
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Retail price
index, 12/31/18
1.20
Required:
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$
133,000
Net purchases
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257,000
Net markups
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Net markdowns
13,000
Net sales
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Retail price index, 12/31/18
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$
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Net purchases
119,040
256,000
Net markups
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Net markdowns
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Net sales
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Retail price index, 12/31/2021
1.10
Required:
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154000
ending inventory at cost
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