Question

Pharoah Inc. had beginning inventory of $12,017 at cost and $19,700 at retail. Net purchases were $112,000 at cost and $174,400 at retail. Net markups were $9,100, net markdowns were $7,400, and sales revenue was $160,500. Assume the price level increased from 100 at the beginning of the year to 105 at year-end. Compute ending inventory at cost using the dollar-value LIFO retail method. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using the dollar-value LIFO retail method $

Answer 1

Answer

Ending inventory using the dollar-value LIFO retail method $ 21,312

--Working

	Cost	Retail	Cost to retail %
Beginning Inventory	$12,017	$19,700	61.000%
Net Purchases	$112,000	$174,400
Net Mark ups		$9,100
Net Mark downs		($7,400)
Purchases	$112,000	$176,100	63.600%
Goods available for sale	$124,017	$195,800
Net Sales		($160,500)
Ending Inventory at Retail		$35,300 [Go to Step 1]
Ending Inventory at Cost	($21,312) [Come back from Step 3]
Cost of Goods Sold	$102,705

	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
$35,300	$33,619	$19,700	$12,017	[19700 x 61% x 1.0]
	[ 35300 / 1.05 ]	$13,919	$9,295	[13919 x 63.6% x 1.05]
Total ending Inventory at dollar value LIFO retail cost			$21,312