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The following data concerning the retail inventory method are taken from the financial records of Blake...

The following data concerning the retail inventory method are taken from the financial records of Blake Company.       

                                                                                           Cost                        Retail

            Beginning inventory                                           $132,000              $ 220,000

            Purchases                                                            362,500                 550,000

            Freight-in                                                               16,000                       —

            Net markups                                                               —                      45,000

            Net markdowns                                                          —                      16,000

            Sales                                                                          —                    625,000

a.) What is the ending inventory at retail?

                       

b.) If the ending inventory is to be valued at approximately the conventional retail inventory method, the calculation of the cost to retail ratio should be based on goods available for sale at:(1) cost(dollar amount) and (2) retail(dollar amount)

c) What is the cost of ending inventory using the FIFO cost method?

d.) What is the cost of ending inventory using the LIFO Retail Method?

Solutions

Expert Solution

Cost Retail
Purchases 362500 550000
Freight-in 16000
Markups 45000
Mark Downs 16000
total 378500 579000
Add: Beginning Inventory 132000 220,000
Goods available for sale 510500 799000
Sales- at retail 625000
Ending year inventory at retail 174000

a. Ending year inventory at retail = 174000

b. cost to retail ratio = 510500/799000 = 63.89%

c. Cost of ending inventory using FIFO cost = 174000*63.89% = 111,172.72

d.Since the year end inventory at retail is lower than the opening inventory at retail, there is no layer for the current year under LIFO Retail method. Therefore, ending inventory at LIFO retail = 174000

ekkarill92 answered 1 year ago
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