Question

On January 1, 2021, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2021:

	Cost		Retail
Beginning inventory	$	78,880	$	136,000
Net purchases		119,040		256,000
Net markups				6,000
Net markdowns				14,000
Net sales				230,000
Retail price index, 12/31/2021				1.10

Required:
Calculate the estimated ending inventory and cost of goods sold for 2021 using the information provided. (Do not round intermediate calculations.)

Ending inventory at retail	154000
ending inventory at cost	?
cost of good sold	?

Answer 1

	Cost	Retail	Cost to
Retail ratio
Beginning inventory	$ 78,880	$ 136,000
Add: Net purchases	$ 119,040	$ 256,000
Add: Net Markups		$ 6,000
Less:Net Markdowns		($ 14,000)
Goods Available for sale (Excluding beginning inventory)	$ 119,040	$ 248,000
Goods Available for sale (Including beginning inventory)	$ 197,920	$ 384,000
Cost to Retail ratio - Base year			58% ( $ 78,880 / $ 136,000 )
Cost to Retail ratio - 2021			48% ( $ 119,040 / $ 248,000 )
Less: Net sales		-2,30,000
Ending Inventory at Retail		$ 154,000
Ending inventory at cost	($ 80,992)
Cost of goods sold	$ 116,928

Note :
Ending inventory at base year retail prices ( $ 154,000 / 1.10 )	$ 140,000
Inventory Layer at base year retail prices	$ 136,000
	$ 4,000
Ending inventory at cost    = ( $ 4,000 x 48% x 1.10 ) + ($ 136,000 x 58% ]	$ 80,992