Question

10. The Marshall Variety Store uses the lifo retail inventory method at stable prices. The following information is available as of January 2, 2021: Cost Retail Inventory, January 2, 2021 $186,000 $270,000 Purchases 560,000 700,000 Sales 760,000 Net Markups 160,000 Net Markdowns 60,000 What was the inventory value as of December 31, 2021 using the lifo-retail inventory method

Answer 1

$310,000

Step-by-step explanation:

Beginning inventory: $186,000 (cost); $ 270,000 (retail);

$186,000 : $270,000 cost to retail ⇒ 1.45

Purchases: $560,000 (cost); $700,000 (retail);

$560,000 : $700,000 cost to retail ⇒ 1.25

Net markups: $n/a (cost); $160,000 (retail);

Net markdowns: $ n/a (cost); $60,000 (retail);

Sales: $ n/a (cost); $760,000 (retail).

the cost of goods sold (COGS) using LIFO = ($700,000 / 1.25) + ($60 / 1.4516) = $560,000 + $41,333.33 = $601,333.33

ending inventory = [($186,000 - $41,333.33) x 1.4516] + $160,000 - $60,000 = $210,000 + $160,000 - $60,000 = $310,000