Question

Problem 9-13 b-c

Late in 2017, Joan Seceda and four other investors took the chain of Wildhorse Department Stores private, and the company has just completed its third year of operations under the ownership of the investment group. Andrea Selig, controller of Wildhorse Department Stores, is in the process of preparing the year-end financial statements. Based on the preliminary financial statements, Seceda has expressed concern over inventory shortages, and she has asked Selig to determine whether an abnormal amount of theft and breakage has occurred. The accounting records of Wildhorse Department Stores contain the following amounts on November 30, 2020, the end of the fiscal year.

		Cost		Retail
Beginning inventory		$66,700		$101,600
Purchases		280,932		400,400
Net markups				50,800
Net markdowns				108,600
Sales revenue				320,600

According to the November 30, 2020, physical inventory, the actual inventory at retail is $118,500.

Assuming that prices have been stable, calculate the value, at cost, of Wildhorse Department Stores’ ending inventory using the last-in, first-out (LIFO) retail method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Estimated ending inventory at Cost

$

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Estimate the amount of shortage, at retail, that has occurred at Wildhorse Department Stores during the year ended November 30, 2020. Estimated inventory shortage

Answer 1