Question

Skysong Company began operations on January 1, 2016, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2016 and, because there was no beginning inventory, its ending inventory for 2016 of $37,300 would have been the same under either the conventional retail system or the LIFO retail system.

On December 31, 2017, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2017, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.

		Cost			Retail
Inventory, Jan. 1, 2017		$37,300			$60,100
Markdowns (net)					12,900
Markups (net)					22,100
Purchases (net)		128,800			178,800
Sales (net)					169,300

Determine the cost of the 2017 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to 2 decimal place, e.g. 78.72% and final answers to 0 decimal places, e.g. 28,987.)

I got A, just need B. The answer to B isnt 48905

Answer 1

(a)

	Cost price	Retail price
Beginning Inventory	$37,300	$60,100
Purchases	$128,800	$178,800
Net Markups		$22,100
Totals	$166,100	$261,000

Cost to retail ratio = $166,100 / $261,000

= 63.64%

Retail price total	$261,000
Less : Net markdowns	$12,900
Total goods at retail	$248,100
Less : Sales	$169,300
Ending inventory at retail	$78,800

Ending inventory at costs = $78,800 * 63.64%

= $50,148

------------------------------------------------------------------------

(b)

	Cost price	Retail price
Purchases	$128,800	$178,800
Net Markups		$22,100
Net Markdowns		($12,900)
Totals	$128,800	$188,000

Cost to retail ratio = $128,800 / $188,000 = 68.51%

Retail price total	$188,000
Add : Beginning inventory	$60,100
Total goods at retail	$248,100
Less : Sales	$169,300
Ending inventory at retail	$78,800
LIFO layer added	$18,700 ($78,800-$60,100)

Ending inventory at costs = Beginning inventory at cost + LIFO layer at cost

= $37,300 + ($18,700 * 68.51%)

= $37,300 + $12,811

= $50,111