Question

44. Leslie, Ltd. use the LIFO retail inventory method to determine its ending inventory. The accounting...

44. Leslie, Ltd. use the LIFO retail inventory method to determine its ending inventory. The accounting records for the company contain the following relevant information


Cost. Retail
Net purchases. $48,000. $79,000
Sales. $91,000
Beginning inventory. $12,000. $25,000
Net markups. $5000
Net markdowns. $4000

What is the LIFO cost of the ending inventory?
A. $7706
B. $8400
C. $6720
D. $8000
Business   Accounting   
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Homework Answers

Answer #1

under LIFO units acquired last are sold first so ending inventoryis left from beginning or initial purchase.

cost Retail cost /retail ratio
Beginning inventory 12000 25000 12000/25000 = 0.48 or 48%
Purchase 48000 79000
markup 5000
markdown (4000)
Total inventory (excluding beginning inventory ) 48000 80000 48000/80000= .60 or 60%
Total inventory (including beginning inventory) 48000+12000= 60000 80000+25000=105000
less:sales (91000)
Ending inventory at retaiil 14000

This 14000 ending inventory at retail is left entirely from beginning inventory of 25000

Ending inventory at cost = inventory at retail * cost to retail ratio (beg)

= 14000*.48 = 6720

correct option is "c"

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