Question

Cullumber Co. uses the retaill inventory method. The following information is available for the current year Cost Retail Beginning inventory 321000 492000 1230000 1730000 Purchases 9000 60000 78000 1530000 Employee discounts Net markups Net markdowns Sales revenue Assuming that the LIFO inventory method is used, that the beginning inventory is the base inventory when the index was 100, and that the index at year end is 112, the ending inventory at dollar-value LIFO retail cost is (Hint: Round intermediate calculation to 3 decimal places, e.g.0.635 and final answer to 0 decimal places.) 357192 $394871 $403735 $434960

Answer 1

Computation of ending inventory at dollar value LIFO retail cost
	Cost	Retail
Beginning Inventory	$321,000	$492,000
Purchases	$1,230,000	$1,730,000
Freight in	$13,500
Net Markups		$60,000
Net Markdowns		($78,000)
Current period goods available for sale	$1,243,500	$1,712,000
Total goods available for sale	$1,564,500	$2,204,000
Less: Sales Revenue		$1,530,000
Employee discounts		$9,000
Ending Inventory at retail value		$665,000
Cost to retail ratio (1243500/1712000)	72.6%
Ending Inventory at retail value deflated to base year price (665000/112)	$593,750
Ending Inventory at retail value	Layers at retail value	Price Index	Cost to retail ratio	Ending Inventory at retail cost
$593,750	$492,000	100%	65.2%	$321,000
	$101,750	112%	72.6%	$82,735
	$593,750			$403,735