Question

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows:

1. The inventory at January 1, 2019, had a retail value of $31,000 and a cost of $11,000 based on the conventional retail method.
2. Transactions during 2019 were as follows:

	Cost			Retail
Gross purchases	$	570,000		$	953,000
Purchase returns		6,000			4,000
Purchase discounts		5,000
Gross sales					958,000
Sales returns					5,000
Employee discounts					3,000
Freight-in		20,000
Net markups					20,000
Net markdowns					4,000

Sales to employees are recorded net of discounts.

3. The retail value of the December 31, 2020, inventory was $48,150, the cost-to-retail percentage for 2020 under the LIFO retail method was 42%, and the appropriate price index was 107% of the January 1, 2020, price level.
4. The retail value of the December 31, 2021, inventory was $43,450, the cost-to-retail percentage for 2021 under the LIFO retail method was 41%, and the appropriate price index was 110% of the January 1, 2020, price level.

Required:
3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2020. Estimating ending inventory for 2020 and 2021.

Answer 1

Solution 3:

Solution 3:
Raleigh Department Store
Dollar-Value LIFO Retail Method
Ending Inventory at Year-end Retail Prices	Ending Inventory at Base Year Retail Prices	Inventory Layers at Base Year Retail Prices	Inventory Layers Converted to Cost
Year 2020
48150	45000	40,000.00	16400
		5,000.00	2247
Total Ending Inventory at dollar-value LIFO retail Cost	18647
Year 2021
43450	39500	39500	16195
Total Ending Inventory at dollar-value LIFO retail Cost	16195