Lithowanderer Company used the retail method to estimate inventory. Data relating to the inventory computation on December 31, 2020 are as follows: Cost 720,000 Retail Inventory, January 1 Purchases 1,000,000 4,080,000 6,300,000 Net markups Sales Estimated normal shoplifting losses Net markdowns 140% of net markdowns 6,820,000 80,000 500,000 Requirement: a. What is the estimated inventory on December 31, 2020 under the average cost approach? b. What is the estimated inventory on December 31, 2020 under the conservative cost approach?
Lithowanderer Company used the retail method to estimate inventory. Data relating to the inventory computation on December 31, 2020 are as follows: Cost 720,000 Retail Inventory, January 1 Purchases 1,000,000 4,080,000 6,300,000 Net markups Sales Estimated normal shoplifting losses Net markdowns 140% of net markdowns 6,820,000 80,000 500,000 Requirement: a. What is the estimated inventory on December 31, 2020 under the average cost approach? b. What is the estimated inventory on December 31, 2020 under the conservative cost approach?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 27CE: Inventory Analysis Singleton Inc. reported the following information for the current year: Required:...
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![2. Lithowanderer Company used the retail method to estimate inventory. Data relating to the
inventory computation on December 31, 2020 are as follows:
Inventory, January 1
Purchases
Cost
720,000
4,080,000
Retail
1,000,000
6,300,000
Net markups
Sales
Estimated normal
shoplifting losses
Net markdowns
140% of net markdowns
6,820,000
80,000
500,000
Requirement:
a. What is the estimated inventory on December 31, 2020 under the average cost
approach?
b. What is the estimated inventory on December 31, 2020 under the conservative cost
approach?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F886e7ce7-3c20-47fb-893d-52928983b834%2Ffe96a803-d61d-4430-9618-95def8804ae0%2Frpj39xn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Lithowanderer Company used the retail method to estimate inventory. Data relating to the
inventory computation on December 31, 2020 are as follows:
Inventory, January 1
Purchases
Cost
720,000
4,080,000
Retail
1,000,000
6,300,000
Net markups
Sales
Estimated normal
shoplifting losses
Net markdowns
140% of net markdowns
6,820,000
80,000
500,000
Requirement:
a. What is the estimated inventory on December 31, 2020 under the average cost
approach?
b. What is the estimated inventory on December 31, 2020 under the conservative cost
approach?
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