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On January 1, 2018, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records...

On January 1, 2018, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records provided the following information:

Cost Retail
Beginning inventory $ 52,500 $ 75,000
Net purchases 206,040 305,000
Net markups 7,000
Net markdowns 9,000
Net sales 282,000
Retail price index, end of year 1.04


Estimate ending inventory using the dollar-value LIFO retail method.

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Answer #1
particulars Cost Retail Cost to Retail ratio
Beginning Inventory 52500 75000
Plus: Net Purchases 206040 305000
  Net Markups 7000
Less: Net Markdowns 9000
Goods available for sale (excluding beginning inventory) 206040 305000
Goods available for sale (including beginning inventory) 258540 378000
Base Layer Cost toretail percentage 52500/75000 70%
Layer cost to retail percentage206040/305000 67%
Less: Net Sales 282000
Estimated ending inventory at current year retail prices 96000
Estimated ending inventory at cost 37867
Estimated cost of goods sold 220673

Estimated ending inventory at cost

96000 / 1.04 = 92307

75000*1.00*70% = 52500

(96000 - 75000) * 1.04 * 67% = 14633

Estimated ending inventory at cost = 52500 - 14633 = 37867

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