Beg Inv @ cost $11,160 Net Additional markups $600 Sales $94,056 Purchases @ retail $92,400 Freight-in $840 Beg Inv @ retail $18,000 Purchases @ cost $54,600 Net markdowns $1,144 13. How much are the good available for sale at retail using the Lifo retail method? Thank you Brenda
Beg Inv @ cost $11,160
Net Additional markups $600
Sales $94,056
Purchases @ retail $92,400
Freight-in $840
Beg Inv @ retail $18,000
Purchases @ cost $54,600
Net markdowns $1,144
13. How much are the good available for sale at retail using the Lifo retail method?
Thank you
Brenda
Retail Method of Inventory Valuation:
The retail inventory method is a method of inventory at the ending period by calculating the relationship between the cost and selling price. Under this method, the organization or the business has to maintain the value of inventory at cost as well as the retail method.
There are various approaches used under this method, they are:
a. Cost Flow Method
b. Average Cost Method
c. Conventional Retail Method
d. LIFO Retail Method
As we are here required to calculate the cost of goods sale under the LIFO Retail method, let us discuss its concept and accordingly calculate the value as required:
LIFO Retail Method:
Under this method, we assume that the retail prices of the inventory are always stable. This assumption is considered because it makes it easy to compare the beginning and ending inventory easily and accordingly calculate the value of the inventory. Under this method there are certain points that need to be considered:
a. Freight-in expenses are added only to the cost value of the purchases.
b. Purchase returns are deducted from the cost and retail value both with different amounts.
c. Purchase discounts should be deducted from the cost value of the purchases.
d. Mark-up and Mark-down values are to be added and deducted respectively from the purchases to calculate the value of the cost of goods available for sale at retail value.
Let us now calculate the cost of goods available for sale at the retail value using the LIFO Retail Method in our following step.
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