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On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both...

On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows:

2021 2022
Cost Retail Cost Retail
Beginning inventory $ 102,300 $ 165,000
Purchases 484,000 715,000 $ 625,000 $ 974,000
Purchase returns 2,800 1,500 2,500 6,100
Freight-in 5,000 8,000
Net markups 5,500 8,400
Net markdowns 4,000 6,300
Net sales to customers 634,000 660,000
Sales to employees (net of 30% discount) 11,900 11,900
Normal spoilage 5,200 4,100
Price Index:
January 1, 2021 1.00
December 31, 2021 1.25
December 31, 2022 1.25

Required:
1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method.

2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method.

3. Estimate the 2021 ending inventory and cost of goods sold using the conventional retail method.

Solutions

Expert Solution

STEP 5: Working notes: Calculate the amount of Sales: Amount of sales - Not Soles to customers Lt Sales to employee =($6 34000 + $ 11,900) = ($645900 STEP 6: Calculate Employee the amount of employee discounts: discount = f sales to employee - Sales to Selling price discount employee [$ 11,900 - $ 11,9001 L 70%. = $17000 - $11,900 - $ 5100 STEP 7 step : Calculate base layer cost to retail Percentage. Base layer cost to 4 Beginning inventory at cost x loo a retail Percentage Beginning inventor at retail $102,300 x 100 $165,000 - 62% =

ekkarill92 answered 1 year ago
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