Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during the year: Cost Retail Inventory, January 1 $32,500 $65,000 Purchases 130,000 223,138 Markups (net) — 3,000 Markdowns (net) — 2,000 Sales — 190,000 Required: 1. Compute the ending inventory by the retail inventory method for the following cost flow assumption: FIFO. Round the cost-to-retail ratio to three decimal places. 2. Compute the ending inventory by the retail inventory method for the following cost flow assumption: Average cost. Round the cost-to-retail ratio to three decimal places. 3. Compute the ending inventory by the retail inventory method for the following cost flow assumption: LIFO. Round the cost-to-retail ratio to three decimal places. 4. Compute the ending inventory by the retail inventory method for the following cost flow assumption: Lower of cost or market (based on average cost). Round the cost-to-retail ratio to three decimal places.
Retail Inventory Method
Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during the year:
| Cost | Retail | |
|---|---|---|
| Inventory, January 1 | $32,500 | $65,000 |
| Purchases | 130,000 | 223,138 |
| Markups (net) | — | 3,000 |
| Markdowns (net) | — | 2,000 |
| Sales | — | 190,000 |
Required:
1. Compute the ending inventory by the retail inventory method for the following cost flow assumption: FIFO. Round the cost-to-retail ratio to three decimal places.
2. Compute the ending inventory by the retail inventory method for the following cost flow assumption: Average cost. Round the cost-to-retail ratio to three decimal places.
3. Compute the ending inventory by the retail inventory method for the following cost flow assumption: LIFO. Round the cost-to-retail ratio to three decimal places.
4. Compute the ending inventory by the retail inventory method for the following cost flow assumption: Lower of cost or market (based on average cost). Round the cost-to-retail ratio to three decimal places.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
