Question

# Potter Variety Store uses the LIFO retail inventory method. Information relating to the computation of the...

Potter Variety Store uses the LIFO retail inventory method. Information relating to the computation of the inventory at December 31, 2018, follows: Cost Retail Inventory, January 1, 2018 \$146,000 \$220,000 Purchases 480,000 700,000 Freight-in 80,000 Sales 750,000 Net markups 160,000 Net markdowns 60,000 Assuming that there was no change in the price index during the year, compute the inventory at December 31, 2018, using the LIFO retail inventory method. Inventory at December 31, 2018 \$

 Cost Retail Beginning inventory \$146,000 \$220,000 Purchases 480,000 700,000 Freight-in 80,000 Net markups 160,000 Net markdowns (60,000) Total (excluding beginning inventory) 560,000 70% 800,000 Total (including beginning inventory) 706,000 1,020,000 Less sales 750,000 Ending inventory \$270,000

Ending inventory \$ 270,000
Beginning inventory \$146,000 (220,000)
Increment \$ 50,000
Increment at cost (\$50,000 × 70%) 35,000

Ending inventory at LIFO cost \$181,000

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