Question

Landmark Book Store uses the conventional retail method.

Instructions

Given the following data, prepare a neat, labeled schedule showing the computation of the cost of inventory on hand at 12/31/17.

	Cost	Retail
Inventory 1/1/17	$28,900	$40,000
Purchases	366,600	610,000
Purchases Returns	9,000	20,000
Purchase Discounts	7,000
Sales (Gross)		595,000
Sales Returns		15,000
Employee Discounts		5,0000
Freight-in	23,500
Freight-out	50,000
Loss from Breakage		2,500
Markups		38,000
Markup Cancellations		18,000
Markdowns		13,500
Markdown Cancellations		8,500

Landmark Book Store has decided to switch to the LIFO retail method for the period beginning 1/1/18.

Instructions

Prepare a schedule showing the computation of the 12/31/18 inventory under the LIFO retail method adjusted for price level changes (i.e., dollar-value LIFO Retail.) Without prejudice to your answer in requirement A above, assume that the 12/31/17 inventory computed under the LIFO Retail method was $50,000 and $34,500 at retail and cost, respectively, for purposes of this requirement. Data for 2018 follows:

	Cost	Retail
Purchases (net)	$360,000	$485,000
Sales (net)		410,000
Markups (net)		30,000
Markdowns (net)		15,000
2017 Price Index	100
2018 Price Index	125

Answer 1