Question
In: Accounting
On January 1, 2018, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions...
On January 1, 2018, HGC Camera Store adopted the dollar-value
LIFO retail inventory method. Inventory transactions at both cost
and retail, and cost indexes for 2018 and 2019 are as
follows:
| 2018 | 2019 | |||||||||||
| Cost | Retail | Cost | Retail | |||||||||
| Beginning inventory | $ | 58,500 | $ | 78,000 | ||||||||
| Net purchases | 110,180 | 127,000 | $ | 115,808 | $ | 133,100 | ||||||
| Freight-in | 3,900 | 4,400 | ||||||||||
| Net markups | 19,500 | 11,800 | ||||||||||
| Net markdowns | 3,900 | 4,100 | ||||||||||
| Net sales to customers | 125,380 | 119,140 | ||||||||||
| Sales to employees (net of 20% discount) | 3,600 | 6,000 | ||||||||||
| Price Index: | ||||||||||||
| January 1, 2018 | 1.00 | |||||||||||
| December 31, 2018 | 1.08 | |||||||||||
| December 31, 2019 | 1.14 | |||||||||||
Required:
Estimate the 2018 and 2019 ending inventory and cost of goods sold
using the dollar-value LIFO retail inventory method. (Do
not round other intermediate calculations. Round your
cost-to-retail percentage calculations to 2 decimal places and
final answers to the nearest whole dollar.)
Solutions
Expert Solution
| 2018 | 2019 | ||
| Estimated ending inventory at retail | $90,720 | $110,880 | |
| Estimated ending inventory at cost | $68,676 | $85,887.6 | |
| Estimated cost of goods sold | $103,904 | $102,996.4 | |
| Year 2018 | |||
| Cost | Retail | ||
| Beginning inventory | $58,500 | $78,000 | |
| Add:Net purchases | $110,180 | $127,000 | |
| Add:Freight-in | $3,900 | ||
| Add:Net markups | $19,500 | ||
| less: Net markdowns | -$3,900 | ||
| Goods available for sale (excluding beginning inventory) | $114,080 | $142,600 | |
| Goods available for sale (including beginning inventory) | $172,580 | $220,600 | |
| Less: Net sales | -$128,980 | ||
| Less:Employee discounts (3600/(1-20%) - 3600 = | -$900 | ||
| Estimated ending inventory at retail | $90,720 | ||
| Estimated ending inventory at cost (calculated below) | $68,676 | ||
| Estimated cost of goods sold ($172,580 - 68,676) | $103,904 | ||
| The cost-to-retail ratio under LIFO for 2016 can be computed as follows: | |||
| Base layer cost to retail % = $58,500/$78000 | 75.00% | ||
| 2018 layer cost to retail % = Net purchases at cost + freightin/Net purchases plus markups less markdowns at retail | |||
| 2018 layer cost to retail % = $114080/$142,600 | 80.00% | ||
| Beginning inventory (Retail) | $78,000 | 75.00% | $58,500 |
| Increment in 2016 (90720-782000) | $12,720 | 80.00% | $10,176 |
| Ending inventory | $90,720 | $68,676 | |
| Year 2019 | |||
| Cost | Retail | ||
| Beginning inventory | $68,676 | $90,720 | |
| Add:Net purchases | $115,808 | $133,100 | |
| Add:Freight-in | $4,400 | ||
| Add:Net markups | $11,800 | ||
| less: Net markdowns | -$4,100 | ||
| Goods available for sale (excluding beginning inventory) | $120,208 | $140,800 | |
| Goods available for sale (including beginning inventory) | $188,884 | $231,520 | |
| Less: Net sales | -$119,140 | ||
| Less:Employee discounts (6000/(1-20%) - 6000= | -$1,500 | ||
| Estimated ending inventory at retail | $110,880 | ||
| Estimated ending inventory at cost (calculated below) | $85,887.6 | ||
| Estimated cost of goods sold | $102,996.4 | ||
| The cost-to-retail ratio under LIFO for 2016 can be computed as follows: | |||
| Base layer cost to retail % = $58,500/$78000 | 75.00% | ||
| 2019 layer cost to retail % = Net purchases at cost + freightin/Net purchases plus markups less markdowns at retail | |||
| 2018 layer cost to retail % = $103,800/$124,000 | 80.00% | ||
| 2019 layer cost to retail % = $120,208/$140800 | 85.38% | ||
| Beginning inventory (Retail) | $78,000 | 75.00% | $58,500 |
| Increment in 2018(above) | $12,720 | 80.00% | $10,176 |
| Increment in 2019 (diference) | $20,160 | 85.38% | $17,211.6 |
| Ending inventory | $110,880 | $85,887.6 |
ekkarill92 answered 1 year agoRelated Solutions
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