Question

# On January 1, 2018, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both...

On January 1, 2018, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2018 and 2019 are as follows:

 2018 2019 Cost Retail Cost Retail Beginning inventory \$ 150,500 \$ 215,000 Purchases 640,000 852,000 \$ 735,000 \$ 923,000 Purchase returns 2,700 5,650 3,500 5,475 Freight-in 6,800 5,000 Net markups 5,600 10,400 Net markdowns 4,450 7,300 Net sales to customers 560,000 708,000 Sales to employees (net of 20% discount) 20,000 20,000 Normal spoilage 3,100 2,000 Price Index: January 1, 2018 1.00 December 31, 2018 1.25 December 31, 2019 1.25

Required:
1. Estimate the 2018 and 2019 ending inventory and cost of goods sold using the dollar-value LIFO retail method.
2. Estimate the 2018 ending inventory and cost of goods sold using the average cost retail method.
3. Estimate the 2018 ending inventory and cost of goods sold using the conventional retail method.

SOLUTION:

REQUIRED 1:

Employment discount must be deducated in the retail column 2018:

= 20000 /0.80

= 25000 -20000

= 5000 \$

there fore empolyment discount is 5000 \$

therefore ending inventory at dollar -value lifo retail cost is 299313\$

Employment discount must be deducated in the retail column 2019:

= 20000 /0.80

= 25000 -20000

= 5000 \$

there fore empolyment discount is 5000 \$

REQUIRED 2:

Employment discount must be deducated in the retail column :

= 20000 /0.80

= 25000 -20000

= 5000 \$

there fore empolyment discount is 5000 \$

REQUIRED 3:

Employment discount must be deducated in the retail column :

= 20000 /0.80

= 25000 -20000

= 5000 \$

there fore empolyment discount is 5000 \$

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