Question

Blossom Company, which uses the retail LIFO method to determine inventory cost, has provided the following information for 2020:

		Cost		Retail
Inventory, 1/1/20		$ 292000		$430000
Net purchases		1234000		1786000
Net markups				214000
Net markdowns				100000
Net sales				1690000

Assuming that the price index was 105 at December 31, 2020 and 100 at January 1, 2020, what is the cost of Blossom's inventory at December 31, 2020 under the dollar-value-LIFO retail method? (Hint: Round intermediate calculation to 2 decimal places, e.g. 0.63 and final answer to 0 decimal places.)

$609524.

$408691.

$414525.

$480500.

Answer 1

	Cost	Retail
Beginning Inventory, 1/1/2020	292,000	430,000
Add: Net Purchases	1,234,000	1,786,000
Add: Net markups		214,000
Less: Net markdowns		(100,000)
Goods available for sale (excluding beginning inventory)	1,234,000	1,900,000
Goods available for sale (including beginning inventory)	1,526,000	2,330,000
Less: Net sales		(1,690,000)
Ending inventory at current year retail prices		640,000
Estimated ending inventory at cost	(428,500)
Estimated cost of goods sold	1,097,500
Base year cost-to-retail percentage (292,000/430,000)	0.68
Current year cost-to-retail percentage	0.65

.

Ending inventory at Year-end Retail Prices	Inventory Layers at Base year Retail Prices	Inventory Layers Converted to Cost
640,000	430,000	292,000
	210,000	136,500 (210,000*0.65)
	640,000	428,500

Cost of Bloosom's inventory at December 31, 2020 = 428,500