In: Accounting
Alquist Company uses the retail method to estimate its ending
inventory. Selected information about its year 2018 operations is
as follows:
January 1, 2018, beginning inventory had a cost of $162,000 and a retail value of $210,000.
Purchases during 2018 cost $1,502,000 with an original retail value of $2,380,000.
Freight costs were $16,000 for incoming merchandise.
Net additional markups were $210,000 and net markdowns were $390,000.
Based on prior experience, shrinkage due to shoplifting was estimated to be $21,000 of retail value.
Merchandise is sold to employees at a 25% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $330,000.
Sales to customers totaled $1,700,000 for the year.
Required:
1. Estimate ending inventory and cost of goods
sold using the conventional retail method.
2. Estimate ending inventory and cost of goods
sold using the LIFO retail method. (Assume stable prices.)