Question

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 $ 72,900 $ 135,000 Net purchases 102,150 232,000 Net markups 5,000 Net markdowns 10,000 Net sales 200,000 Retail price index, 12/31/18 1.08

Required: Calculate the estimated ending inventory at retail and ending inventory at cost and cost of goods sold for 2018.

Answer 1

	Cost	Retail
Beginning inventory	$              72,900	$        135,000
Plus: Net Purchases	$            102,150	$        232,000
Net Markup		$            5,000
Less: Mark Down		$        (10,000)
Goods Available For Sale (Excluding Beginning Inventory)	$            102,150	$        227,000
Goods Available For Sale (Including Beginning Inventory)	$            175,050	$        362,000
Base year cost-to retail % (72900/135000)	54%
2011 cost-to retail %(102150/227000)	45%
Less Net Sales		$     (200,000)
Estimated Ending Inventory at current year retail Prices		$        162,000
Estimated Ending Inventory at Cost		$          79,650
Estimated Cost of Goods Sold		$          95,400

	Step1	Step 2	Step 3
Estimated Ending Inventory at year end retail price	Estimated Ending Inventory at base year Retail price	Inventory Layers At Base Year Retail Prices	Inventory Layers converted to cost
$               162,000	$      150,000.00	135000 (Base)	$           72,900
	(162000/1.08)	15000( 2018)	$              6,750
	Total Ending Inventory		$           79,650