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 11. Lets assume they employ the LIFO retail method at time of stable prices. What is the ending inventory at retail if using the LIFO retail? 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
11. Lets assume they employ the LIFO retail method at time of stable prices. What is the ending inventory at retail if using the LIFO retail?
Thank you
Brenda
Retail Method of Inventory Valuation is a method in the accounting system used to evaluate the value of the inventory merchandise for a particular accounting period. Inventories are recorded at cost, so this method enables us to calculate the value of the merchandise using cost to retail percentage ratio, that is by calculating the ratio between the cost of inventory to the price of the inventory in the market.
There are various approaches used to calculate the value of inventory under Retail Method of Inventory Valuation like:
1. Average Cost Method
2. Conventional Retail Method
3. LIFO Retail Method
As we are required to follow LIFO Retail Method as per the question, let us discuss what it is and how it is calculated:
LIFO Retail Method:
Under this method, it is assumed that the prices of the inventory remained stable during the accounting period. For calculating the inventory value of the merchandise following instructions needs to be followed:
a. Freight-in is added only to the cost value of the purchases.
b. Purchase returns are to be deducted from both the cost value and retail value of the purchases.
c. All the mark-ups and mark-downs are to be deducted from the retail value.
Let us calculate the retail value of ending inventory using the LIFO Retail Method in our following steps.
Step by step
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