As of January 1, 2020, Aristotle Inc. adopted the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2020, you obtain the following data. Cost Selling Price Inventory, January 1 $ 30,000 $ 43,000 Markdowns 10,500 Markups 9,200 Markdown cancellations 6,500 Markup cancellations 3,200 Purchases 104,800 155,000 Sales revenue 154,000 Purchase returns 2,800 4,000 Sales returns and allowances 8,000 Instructions a. Prepare a schedule to compute Aristotle’s June 30, 2020, inventory under the conventional retail method of accounting for inventories. b. Without prejudice to your solution to part (a), assume that you computed the June 30, 2020, inventory to be $59,400 at retail and the ratio of cost to retail to be 70%. The general price level has increased from 100 at January 1, 2020, to 108 at June 30, 2020. Prepare a schedule to compute the June 30, 2020, inventory at the June 30 price level under the dollar-value LIFO retail method.
As of January 1, 2020, Aristotle Inc. adopted the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2020, you obtain the following data. Cost Selling Price Inventory, January 1 $ 30,000 $ 43,000 Markdowns 10,500 Markups 9,200 Markdown cancellations 6,500 Markup cancellations 3,200 Purchases 104,800 155,000 Sales revenue 154,000 Purchase returns 2,800 4,000 Sales returns and allowances 8,000 Instructions a. Prepare a schedule to compute Aristotle’s June 30, 2020, inventory under the conventional retail method of accounting for inventories. b. Without prejudice to your solution to part (a), assume that you computed the June 30, 2020, inventory to be $59,400 at retail and the ratio of cost to retail to be 70%. The general price level has increased from 100 at January 1, 2020, to 108 at June 30, 2020. Prepare a schedule to compute the June 30, 2020, inventory at the June 30 price level under the dollar-value LIFO retail method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
As of January 1, 2020, Aristotle Inc. adopted the retail method of accounting for its merchandise inventory.
To prepare the store’s financial statements at June 30, 2020, you obtain the following data.
| Cost | Selling Price | |||
| Inventory, January 1 | $ 30,000 | $ 43,000 | ||
| Markdowns | 10,500 | |||
| Markups | 9,200 | |||
| Markdown cancellations | 6,500 | |||
| Markup cancellations | 3,200 | |||
| Purchases | 104,800 | 155,000 | ||
| Sales revenue | 154,000 | |||
| Purchase returns | 2,800 | 4,000 | ||
| Sales returns and allowances | 8,000 |
Instructions
a. Prepare a schedule to compute Aristotle’s June 30, 2020, inventory under the conventional retail method of accounting for inventories.
b. Without prejudice to your solution to part (a), assume that you computed the June 30, 2020, inventory to be $59,400 at retail and the ratio of cost to retail to be 70%. The general price level has increased from 100 at January 1, 2020, to 108 at June 30, 2020. Prepare a schedule to compute the June 30, 2020, inventory at the June 30 price level under the dollar-value LIFO retail method.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education