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Company ABC uses the last-in, first-out (LIFO) dollar value retail inventory method. It adopted this method...
Company ABC uses the last-in, first-out (LIFO) dollar value retail inventory method. It adopted this method at the beginning of this year. The cost index for the year was 1.12. Below is information for the first year. Cost Retail BI 1082.0 1542.0 Net purchases 3462.4 5088.6 Net Sales 0.0 4579.7 Ending inventory at retail is: Answer The cost to retail conversion for beginning inventory is (round to at least 3 decimal points): Answer The cost to retail conversion for the layer added is (round to at least 3 decimal points): Answer Ending inventory at cost is: Answer Cost of goods sold is: Answer
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Expert Solution
| Ans. | Particulars | Cost | Retail |
| Beginning inventory | 1082 | 1542 | |
| Add: Net purchases | 3462.4 | 5088.6 | |
| Goods available for sale (excluding beginning inventory) | 3462.4 | 5088.6 | |
| Goods available for sale (including beginning inventory) | 4544.4 | 6630.6 | |
| Less: net sales | -4579.7 | ||
| Estimated ending inventory at current year retail prices | 2050.9 | ||
| Estimated ending inventory at cost | 1300 | ||
| Estimated cost of goods sold (4544.4 - 1300) | 3244 | rounded | |
| Base year cost-to-retail percentage = 1082 / 1542 * 100 | |||
| 70% | |||
| 2018 cost-to-retail percentage = 3462.4 / 5088.6 * 100 | |||
| 68% | |||
| *Calculation of estimated ending inventory at cost: | |||
| Ending inventory at retail price = 2050.9 | |||
| Ending inventory at base year retail price = Ending inventory at retail / price index | |||
| 2050.9 / 1.12 | |||
| 1831.161 | |||
| Inventory layers at base year retail prices: (converted to cost) | |||
| 1542 * 1 * 70% | 1079.4 | ||
| (1831.161 - 1542) * 1.12 * 68% | 220.2250176 | ||
| Total ending inventory at cost | 1300 | ||
ekkarill92 answered 1 year agoRelated Solutions
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