Question

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows: The inventory at January 1, 2019, had a retail value of $31,000 and a cost of $11,000 based on the conventional retail method. Transactions during 2019 were as follows:

Cost Retail Gross purchases $ 570,000 $ 953,000 Purchase returns 6,000 4,000 Purchase discounts 5,000 Gross sales 958,000 Sales returns 5,000 Employee discounts 3,000 Freight-in 20,000 Net markups 20,000 Net markdowns 4,000 Sales to employees are recorded net of discounts. The retail value of the December 31, 2020, inventory was $48,150, the cost-to-retail percentage for 2020 under the LIFO retail method was 42%, and the appropriate price index was 107% of the January 1, 2020, price level. The retail value of the December 31, 2021, inventory was $43,450, the cost-to-retail percentage for 2021 under the LIFO retail method was 41%, and the appropriate price index was 110% of the January 1, 2020, price level. Required: 1. Estimate ending inventory for 2019 using the conventional retail method.

Answer 1

Answert ① The value do Ending Enventory & --- cost Retail I cost-to- Retail ratio 11000 31,000 570,000 953,000 594 Beginning Rawestany purchases freight in 20.000 purchase Returing (62000) (44000 Purchase Dixounts (5,000) Ac markups 20.000 1000000 cost to Retail Percentage (590.000|196000)x10 Act markdownsament (4000) Goods available for sale 590,000 996,000 net caly (968000-5000) (953.000) Employee Discounts 03000) Estimated Ending inuentory at retail 40.000 Estimated Ending inventory at cost $ 23,600 (10,000x 5940)=23600