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Exercise 1 (Blue Cow): On January 1, 2018, the Blue Cow Corporation adopted the dollarvalue LIFO...

Exercise 1 (Blue Cow): On January 1, 2018, the Blue Cow Corporation adopted the dollarvalue LIFO retail inventory method. Beginning inventory at cost and at retail were $180,000 and $278,250, respectively. Net purchases during the year at cost and at retail were $735,200 and $907,000, respectively. Markups during the year were $12,000. There were no markdowns. Net sales for 2018 were $866,500. The retail price index at the end of 2018 was 1.08. What is the inventory balance that Blue Cow Corporation would report in its 12/31/2018 balance sheet?

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Answer #1

Particular

Cost

Retail

Beginning inventory(180000/278250=0.6469)

180000

278250

Net purchase

735200

907000

Add: net markup

12000

Total(exclude begin inventory)

735200

919000

Ratio of cost to retail(735200/919000=0.80)

0.8

Total (including beginning inventory)

915200

1197250

Less: net sale

866500

Ending inventory at retail

330750

Ending inventory retail price

Layer at retail price

Cost to retail

Ending inventory LIFO cost

330750

278250

0.6469

179999.9

52500

0.8

42000

Ending inventory at LIFO cost (Total)

222000
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