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			Retail
Beginning inventory	$	250,000		$	364,000
Net purchases		663,000			830,000
Net markups					29,000
Net markdowns					9,000
Net sales					805,000

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.

Answer 1

Beginning inventory Less: Net purchases Inventory Available for Sale Net markups Net markdowns Net Markups Totals Less: Net sales Ending Inventory at Retail Cost Retail $ 250000 $ 364000 663000|| 830000 1194000 290001 9000 20000 =29000-9000 1214000 =1194000+20000 805000 1=1,214,000-805,000 409000 End Inventory LIFO Cost 69% (250000/364000)*100 364000 364000 250000 (364000*69%) 80% (663000/830000) *100 45000 35946 (450000*80%) 285946 Layers at Retail Prices Cost of Goods Sold at LIFO 80% 785000 627054 (785000*80%) (805000-20000) Ratio calculated is Cost to Retail Ratio