Murdock Industries uses a periodic inventory system and the LIFO retail method to estimate its ending...

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Murdock Industries uses a periodic inventory system and the LIFO retail method to estimate its ending...

Murdock Industries uses a periodic inventory system and the LIFO retail method to estimate its ending inventories. The following data has been summarized for December 31, 2018:

	Cost		Retail
Inventory, January 1	$	110,000	$	159,000
Purchases		353,569		537,000
Net markups				14,000
Net markdowns				8,200
Net sales				516,000

Required:
Estimate the LIFO cost of ending inventory. Assume stable retail prices during the period.

business accounting

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Answer 1

Answer #1

	Cost	Retail
Inventory, January 1	$ 110,000	$ 159,000
Net Purchases	$353,569	$ 537,000
Net markups		$ 14,000
Net markdowns		$ (8,200)
Goods available for sale (Excluding BI)	$ 353,569	$ 542,800
Goods available for sale	$ 463,569	$ 701,800
Cost to retail percentage: $353,569 / $542,800 = 65%
Net sales		$ (516,000)
Ending Inventory: At retail		$ 185,800

Estimated Ending Inventory at cost
	Retail	Cost
Beginning Inventory	$ 159,000	$ 110,000
Current period's layer: 26,800 * 65%	$ 26,800	$ 17,420
Total	$ 185,800	$ 127,420

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Answer 2

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