Question

Crosby Company owns a chain of hardware stores throughout the state. The company uses a periodic Inventory system and the retail Inventory method to estimate ending Inventory and cost of goods sold. The following data are available for the three months ending March 31, 2021: Cost $360,000 840,000 $ Beginning inventory Net purchases Net markups Net markdowns Net Sales Retail 460.000 1,040,000 17,000 7.000 1,023,000 Required: Complete the table below to estimate the LIFO cost of ending inventory and cost of goods sold for the three months ending March 31, 2021, using the information provided. Assume stable retail prices during the period. Cost Retail Cost-to- Retail Ratio $ 360,000 840,000 Beginning inventory Plus: Net purchases Not markups Less: Nel markdowns Goods available for sale (excluding beg, inventory) Goods available for sale (including beg inventory) 400,000 1,040,000 17000 7,000 1,050,000 1,510,000 840,000 1,200,000 Cost to retail percentage 1,023,000 487,000 Less: Net sales Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 387,163 812,837 $

Answer 1

		Cost	Retail	Cost-Retail ratio
	Beginning Inventory	360000	460000	78.26086957
Add:	Purchase	840000	1040000
Add:	Net markups	0	17000
Less:	Net markdown	0	7000
	Goods available for sale excluding beginning inventory	840000	1050000	80
	Goods available for sale including beginning inventory (A)	1200000	1510000	79.47019868
Less:	Sales (B)		1023000
	Estimated ending inventory at retail (A-B)		487000

Cost-retail ratio= Cost/Retail*100

Estimated ending inventory at cost	Retail (A)	Cost-Retail ratio	Cost =Retail*cost retail ratio/100
Beginning inventory	460000	78.26086957	360000
Current period	27000	80	21600
Total	487000		381600

Estimated cost of goods sold	Retail	Cost-Retail ratio	Cost (Retail*cost-retail ratio/100)
Current period	1023000	80	818400