Question

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

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.

  1. 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.
  2. 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.

Question

1. Total Ending inventory at dollar -value LIFO retail cost 2020 -------------

2. . Total Ending inventory at dollar -value LIFO retail cost 2021

Homework Answers

Answer #1
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
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