Question

S

Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2021, the records indicate the following data:

	($ in 000s)
	Cost			Retail
Beginning inventory	$	60		$	100
Purchases		533			935
Freight-in on purchases		26
Purchase returns		1			1
Net markups					3
Net markdowns					7
Net sales					812

Required:
Assuming the price level increased from 1.00 at January 1 to 1.80 at December 31, 2021, use the dollar-value LIFO retail method to approximate cost of ending inventory and cost of goods sold. (Do not round intermediate calculations. Round final answers to the nearest whole dollar. Enter your answers in thousands.)

Answer 1

• Requirement asked

Ending Inventory at Retail	$218
Ending Inventory at Cost	$83
Cost of Goods Sold	$535

• Working

	Cost	Retail	Cost to retail %
Beginning Inventory	$60	$100	60.000%
Net Purchases + Freight	$558	$934
Net Mark ups	$0	$3
Net Mark downs		($7)
Purchases	$558	$930	60.000%
Goods available for sale	$618	$1,030
Net Sales		($812)
Ending Inventory at Retail		$218
Ending Inventory at Cost	($83)
Cost of Goods Sold	$535

	Step 1	Step 2	Step #3
Ending Inventory at Year end retail prices	Ending Inventory at Year end BASE YEAR retail prices	Inventory Layer at base year retail prices	Inventory Layers converted to cost
$218	$121	$100	$60	[100 x 60% x 1.0]
	[ 218 / 1.8 ]	$21	$23	[21 x 60% x 1.8]
Total ending Inventory at dollar value LIFO retail cost			$83