Given the following information for Miller, Inc.: CostRetailMarkdown cancellations $950Markup cancellations 3,500Employee discounts 1,020Purchase returns$1,0301,520Purchases35,40046,787Inventory, January 17,16013,820Purchase discounts taken756 Freight-in4,000 Markups 14,500Markdowns 2,600Sales 56,700Required:a. Determine the inventory value using the retail inventory method and the FIFO cost flow assumption.b. Determine the inventory value using the retail inventory method and the lower of average cost or market cost flow assumption. Round intermediate calculation to two decimal places and final answer to nearest dollar.

Name: Given the following information for Miller, Inc.: CostRetailMarkdown c
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Given the following information for Miller, Inc.: CostRetailMarkdown cancellations $950Markup cancellations 3,500Employee discounts 1,020Purchase returns$1,0301,520Purchases35,40046,787Inventory, January 17,16013,820Purchase discounts taken756 Freigh

This method is used to estimate the value of inventory by measuring the cost of inventory relative to the price of the merchandise. Particulars Cost Retail Purchase 35400 46787 Less: Returns -1030 -1520 Less: Discounts -756 Add: Freight in 4000 Add: Mark up 14500 Less: MarkDown -2600 Add: Beginning Inventory 7160 13820 Goods Available for sale 44774 70987 Less: Sales -56700 Ending Inventory 9000 14287 Cost to the retail ratio: Cost of goods available for sale after markdown/Goods available for sale retail After markdown) 44774/70987 63% Thus, ending inventory=14287*63%=9000Particulars Cost Retail Beginning Inventory 7160 13820 Add: Net Purchase 33614 45267 Freight in 4000 Net markup 14500 Goods available for sale 44774 73587 Less: Markdown -2600 Less: Sales -56700 Estimated ending inventory 8692 14287 Cost to the retail ratio: Cost of goods available for sale before markdown/Goods available for sale retail before markdown) 44774/73587 60.84% Thus, ending inventory=14287*60.84%=8692.2

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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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Given the following information for Miller, Inc.:

	Cost	Retail
Markdown cancellations		$950
Markup cancellations		3,500
Employee discounts		1,020
Purchase returns	$1,030	1,520
Purchases	35,400	46,787
Inventory, January 1	7,160	13,820
Purchase discounts taken	756
Freight-in	4,000
Markups		14,500
Markdowns		2,600
Sales		56,700

Required:

a. Determine the inventory value using the retail inventory method and the FIFO cost flow assumption.

b. Determine the inventory value using the retail inventory method and the lower of average cost or market cost flow assumption. Round intermediate calculation to two decimal places and final answer to nearest dollar.

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