Question

Dollar-Value LIFO Retail Johns Company adopts the dollar-value LIFO retail inventory method on January 1, 2016....

Dollar-Value LIFO Retail

Johns Company adopts the dollar-value LIFO retail inventory method on January 1, 2016. The following information for 2016 is obtained from Johns' records:

Cost Retail
Inventory, January 1, 2016 $20,000 $29,000
Purchases 60,000 92,000
Net additional markups — 1,000
Net markdowns — 3,000
Sales — 75,000

The price index on January 1, 2016, was 100, and on December 31, 2016, it was 110.

Required:

Compute the cost of the inventory on December 31, 2016. Round the cost-to-retail ratio to three decimal places.

JOHNS COMPANY
Calculation of cost of inventory using Dollar-Value LIFO
December 31, 2016
Cost Retail
Beginning inventory $20,000 $29,000
Purchases 60,000 $92,000
Add: Markups (net) 1,000
Less: Markdowns (net) 3,000
$90,000
Goods available for sale $80,000 $119,000
Less: Sales 75,000
Ending inventory at retail ????? $44,000
Ending inventory at cost $40,000
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