Question

PLEASE explain how to get the answer.

Retail Inventory Method

The following information relates to the retail inventory method used by Jeffress Company:

	Cost		Retail
Beginning inventory	$11,160		$18,000
Purchases	54,600		92,400
Freight-in	840		—
Net additional markups	—		600
Net markdowns	—		1,144
Sales	—		94,056

Required:

1 (a). Compute the ending inventory by the retail inventory method using the following cost flow assumption: FIFO. Round the cost-to-retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

JEFFRESS COMPANY
Calculation of ending inventory by retail inventory method
FIFO
	Cost	Retail
Purchases	$	$
Freight-in
Markups (net)
Markdowns (net)
	$	$
Beginning inventory
Goods available for sale	$	$
Less: Sales
Ending inventory at retail		$
Ending inventory at cost	$

1 (b). Compute the ending inventory by the retail inventory method using the following cost flow assumption: Average cost. Round the cost-to-retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

JEFFRESS COMPANY
Calculation of ending inventory by retail inventory method
Average Cost
	Cost	Retail
	$	$
	$	$
		$
	$

1 (c). Compute the ending inventory by the retail inventory method using the following cost flow assumption: LIFO. Round the cost-to-retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

JEFFRESS COMPANY
Calculation of ending inventory by retail inventory method
LIFO
	Cost	Retail
	$	$
	$	$
	$	$
	$	$
		$
	$

1 (d). Compute the ending inventory by the retail inventory method using the following cost flow assumption: Lower of cost or market (based on average cost). Round the cost-to-retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

JEFFRESS COMPANY
Calculation of ending inventory by retail inventory method
Lower of Cost or Market (based on average cost)
	Cost	Retail
	$	$
	$	$
		$
	$

2. Which of the following assumption(s) is/are necessary for the retail inventory method to produce accurate estimates of ending inventory?

1. All of the items in inventory have the same markup.
2. The cost-to-retail ratio must remain constant over the accounting period.

Answer 1

Sow tHons Retari inventory Method Method a) The iwen tory the 1etai onng iomentay y the Cast to Yelaf . the Cos fiow assumption : FIFO a moon Yatio to th ee decimal piaces. Toond dollai dotas whoie to the neavest Legend Re tai Cost 54,600 92,u00 porchases raight in 840 600 Markops -$1,uu Mank doon Tot al pochale 55,4u0 $91856 18,000 6eginning imventray10 Choods available for Sares $109SS6 66 600 SQUOS6 Saies during peviod ending inventoy at relai66,600 Cost of Retai $15,800 $9,536 4 endin g inventor y

suuD 1856 CoStof Relai 0. 60 b) the relai inventory method The ending inventoy by assomp1on he Retai Legend Cost 92 400 poichases 541600 $600 Masr op - u4 Mark doon freicht n $840 91,856 $554LL0 Total porchade 18000 Beginning Inventory 60 Coods availabie for Sate 109, S56 66, 600 Sales dosing he period $94656 ending imentayat 1S,800 $66, 600 Yetai Cost ot Re tai 0.6 ending in ventory $9,578.72

66600 to9856 Retai Cost of 61 en din ventay by th vetail inven tory method Using C) The assumphon 4 FO Cost fiow the gend Cost Retail Poichases 54600 $92,u00 Mart Up $600 Mayk doLon $11uu 840 in Total pochase $ १।,856 $55, uuo 18,000 eginming ine $l09,856 66, 600 Sat e $q4,056 Saies duving pesiod ending inven tey $66, 600 tS,800 Cost topetail S0.6 ending inventery 9,796 00

to Retai Cast 60/13000 O-62 Market Cost oY d) Lower ol Legen d Cost Retai POichases $92,u00 $54,600 600 Mark Op Mark douon reight in $840 Total puichase 91,856 S5,uuo $180,000 Seaining inventory,160 Coods availabie fo Saies 1o৭,९5 6 66,600 Saie dving 94,056 perod ending tnwentoryat 661600 15,800 Ye tai 0.60 Cost of Retai C'G600 Intoo) ending In ventoy $ 9,480.00