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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 $

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Answer #1
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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