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 $35,000 $70,000 Purchases 140,000 249,000 Markups (net) — 4,000 Markdowns (net) — 3,000 Sales — 180,000 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. HARMES COMPANY Calculation of ending inventory by retail inventory method FIFO Cost Retail $ $ $ Cost-to-retail ratio: $ $ $ $ 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Average Cost Cost Retail $ $ $ $ Cost-to-retail ratio $ $ 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. HARMES COMPANY Calculation of ending inventory by retail inventory method LIFO Cost Retail $ $ Cost-to-retail ratio $ $ $ Cost-to-retail ratio $ $ 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Lower of Cost or Market (based on average cost) Cost Retail $ $ $ $ Cost-to-retail ratio $ $ $ $

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 $35,000 $70,000 Purchases 140,000 249,000 Markups (net) — 4,000 Markdowns (net) — 3,000 Sales — 180,000 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. HARMES COMPANY Calculation of ending inventory by retail inventory method FIFO Cost Retail $ $ $ Cost-to-retail ratio: $ $ $ $ 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Average Cost Cost Retail $ $ $ $ Cost-to-retail ratio $ $ 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. HARMES COMPANY Calculation of ending inventory by retail inventory method LIFO Cost Retail $ $ Cost-to-retail ratio $ $ $ Cost-to-retail ratio $ $ 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Lower of Cost or Market (based on average cost) Cost Retail $ $ $ $ Cost-to-retail ratio $ $ $ $

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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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	$35,000	$70,000
Purchases	140,000	249,000
Markups (net)	—	4,000
Markdowns (net)	—	3,000
Sales	—	180,000

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.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
FIFO
	Cost	Retail
	$	$


	$
Cost-to-retail ratio:

	$	$

	$	$

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.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
Average Cost
	Cost	Retail
	$	$



	$	$
Cost-to-retail ratio

	$	$

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.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
LIFO
	Cost	Retail
	$	$
Cost-to-retail ratio

		$

	$	$
Cost-to-retail ratio

	$	$

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.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
Lower of Cost or Market (based on average cost)
	Cost	Retail
	$	$


	$	$
Cost-to-retail ratio

	$	$

	$	$

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