Required: 1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method. Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 2021 2022
Required: 1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method. Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold 2021 2022
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required Information
Problem 9-13 (Algo) Retail inventory method; various applications [LO9-3, 9-4, 9-5)
[The following information applies to the questions displayed below.]
On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail,
and cost indexes for 2021 and 2022 are as follows:
Beginning inventory
Purchases
Purchase returns
Freight-in
Net markups
Net markdowns
Net sales to customers
Sales to employees (net of 25% discount)
Normal spoilage
Price Index:
January 1, 2021
December 31, 2021
December 31, 2022
Problem 9-13 (Algo) Part 1
Estimated ending inventory at retail
Estimated ending inventory at cost
Estimated cost of goods sold
2021
2021
2022
Cost
Retail
$ 96,000 $160,000
520,000 803,000
2,700
3,000
4,000
1.00
1.25
1.25
6,000
4,000
670,000
12,000
3,000
2822
Cost
$600,000 $950,000
2,400
5,750
8,000
Retail
Required:
1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method.
8,200
6,200
680,000
12,000
4,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1de229ca-d610-4e0a-8ba8-f4b8dab4ff7a%2F762452e5-f22a-4704-bad7-8a35a47a66a0%2Fhghx9os_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
Problem 9-13 (Algo) Retail inventory method; various applications [LO9-3, 9-4, 9-5)
[The following information applies to the questions displayed below.]
On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail,
and cost indexes for 2021 and 2022 are as follows:
Beginning inventory
Purchases
Purchase returns
Freight-in
Net markups
Net markdowns
Net sales to customers
Sales to employees (net of 25% discount)
Normal spoilage
Price Index:
January 1, 2021
December 31, 2021
December 31, 2022
Problem 9-13 (Algo) Part 1
Estimated ending inventory at retail
Estimated ending inventory at cost
Estimated cost of goods sold
2021
2021
2022
Cost
Retail
$ 96,000 $160,000
520,000 803,000
2,700
3,000
4,000
1.00
1.25
1.25
6,000
4,000
670,000
12,000
3,000
2822
Cost
$600,000 $950,000
2,400
5,750
8,000
Retail
Required:
1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method.
8,200
6,200
680,000
12,000
4,000
Expert Solution
Step 1
| Note | Working | 2021 | 2021 | 2022 | 2022 | |
| Cost | Retail Price | Cost | Retail Price | |||
| Opening Inventory | A | 96,000 | 160,000 | 143,450 | 273,000 | |
| Cost to retail ratio | Cost/Retail *100 | 60.00% | 52.54% | |||
| Purchases | B | 520,000 | 803,000 | 600,000 | 950,000 | |
| Purchase Return | C | (2,700) | (3,000) | (2,400) | (5,750) | |
| Freight in | D | 4,000 | 8,000 | |||
| Markups | E | 6,000 | 8,200 | |||
| Markdowns | F | (4,000) | (6,200) | |||
| Total Purchases | G | SUM(B:F) | 521,300 | 802,000 | 605,600 | 946,250 |
| Cost to retail ratio |
Cost/Retail *100 |
65.00% | 64.00% | |||
| Normal Spoilage | H | (3,000) | (4,000) | |||
| Cost of Goods sold | L | A+G+H | 617,300 | 959,000 | 749,050 | 1,215,250 |
| Sales | ||||||
| Sales to customers | I | Given | 670,000 | 680,000 | ||
| Sales to employees | J | 12,000/0.75 | 16,000 | 16,000 | ||
| Total Sales | K | I+J | 686,000 | 696,000 | ||
| Closing Inventory | L-K | 273,000 | 519,250 | |||
Working Note for Closing Inventory
1 ) For ending on December 31, 2021
| Ending inventory as on December 31, 2021 = $ 273,000 |
| Ending inventory adjusted for price changes @ 1.25 = 273,000/1.25 = $ 218,400 |
| Date | Inventory $ | Price Index | Cost to retail | Inventory Cost $ |
| 1/1/2021 | 160,000 | 1 | 60% | 96,000 |
| 12/31/2021 | 58,400 | 1.25 | 65% | 47,450 |
| 218,400 | 143,450 |
1 ) For ending on December 31, 2022
| Ending inventory as on December 31, 2022 = $ 519,250 |
| Ending inventory adjusted for price changes @ 1.25 = 519,250/1.25 = $ 415,400 |
| Date | Inventory $ | Price Index | Cost to retail | Inventory Cost $ |
| 12/31/2021 | 273,000 | 1.25 | 52.54% | 184,275 |
| 12/31/2022 | 142,400 | 1.25 | 64.00% | 113,920 |
| 415,400 | 298195 |
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