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Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2018 operations is as follows: a. January 1, 2018, beginning inventory had a cost of $312,000 and a retail value of $330,000. b. Purchases during 2018 cost $1,740,000 with an original retail value of $2,670,000. c. Freight costs were $28,000 for incoming merchandise. d. Net additional markups were $250,000 and net markdowns were $320,000. e. Based on prior experience, shrinkage due to shoplifting was estimated to be $33,000 of retail value. f. Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $430,000. g. Sales to customers totaled $2,000,000 for the year.

Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2018 operations is as follows: a. January 1, 2018, beginning inventory had a cost of $312,000 and a retail value of $330,000. b. Purchases during 2018 cost $1,740,000 with an original retail value of $2,670,000. c. Freight costs were $28,000 for incoming merchandise. d. Net additional markups were $250,000 and net markdowns were $320,000. e. Based on prior experience, shrinkage due to shoplifting was estimated to be $33,000 of retail value. f. Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $430,000. g. Sales to customers totaled $2,000,000 for the year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2018 operations is as follows: a. January 1, 2018, beginning inventory had a cost of $312,000 and a retail value of $330,000. b. Purchases during 2018 cost $1,740,000 with an original retail value of $2,670,000. c. Freight costs were $28,000 for incoming merchandise. d. Net additional markups were $250,000 and net markdowns were $320,000. e. Based on prior experience, shrinkage due to shoplifting was estimated to be $33,000 of retail value. f. Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $430,000. g. Sales to customers totaled $2,000,000 for the year. Required: 1. Estimate ending inventory and cost of goods sold using the conventional retail method. 2. Estimate ending inventory and cost of goods sold using the LIFO retail method. (Assume stable prices.) (For all requirements, Round your intermediate calculations and final answers to whole dollars.) Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold Conventional Retail Method LIFO Retail Method
Transcribed Image Text:Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2018 operations is as follows: a. January 1, 2018, beginning inventory had a cost of $312,000 and a retail value of $330,000. b. Purchases during 2018 cost $1,740,000 with an original retail value of $2,670,000. c. Freight costs were $28,000 for incoming merchandise. d. Net additional markups were $250,000 and net markdowns were $320,000. e. Based on prior experience, shrinkage due to shoplifting was estimated to be $33,000 of retail value. f. Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2018 is $430,000. g. Sales to customers totaled $2,000,000 for the year. Required: 1. Estimate ending inventory and cost of goods sold using the conventional retail method. 2. Estimate ending inventory and cost of goods sold using the LIFO retail method. (Assume stable prices.) (For all requirements, Round your intermediate calculations and final answers to whole dollars.) Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold Conventional Retail Method LIFO Retail Method
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