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Concept explainers
Conventional retail investment method: Conventional retail investment method is a method generally used by small enterprises to track various costs incurred for purchasing a product from the manufacturer and selling price for sale of product to consumers.
LIFO method: LIFO method can be defined as the goods which are purchased last are sold first.
Introduction: The following steps should be adopted to compute ending inventory at retail.
First, we should determine the cost-to-retail percentage which is derived by dividing the cost by the retail price. Then, we compute the cost of goods available for sale by adding the cost of purchases to the cost of opening inventory.
Cost-to-retail ratio is computed by dividing total cost of goods available for sale by retail value of goods available for sale.
(a)
To compute: To compute the cost of the ending inventory.
(b)
To compute: To compute the cost of the 2017 ending inventory under the LIFO retail method.
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Chapter 9 Solutions
Intermediate Accounting, Binder Ready Version
- Selected comparative financial statements of Korbin Company follow. Sales KORBIN COMPANY Comparative Income Statements For Years Ended December 31 2021 2020 $ 512,008 $ 392,240 2019 $ 272,200 Cost of goods sold 308,229 245,542 174,208 Gross profit 203,779 146,698 97,992 Selling expenses 72,705 54,129 35,930 Administrative expenses 46,081 34,517 22,593 Total expenses 118,786 88,646 58,523 Income before taxes .84,993 58,052 39,469 Income tax expense 15,809 11,901 8,012 Net income $ 69,184 $ 46,151 $ 31,457 KORBIN COMPANY Comparative Balance Sheets Assets Current assets Long-term investments Plant assets, net Total assets Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings December 31 2021 2020 2019 $ 54,370 0 $ 36,390 600 $ 48,645 3,870 99,436 90,776 53,339 Total liabilities and equity $ 153,806 $ 127,766 $ 105,854 $ 22,456 $ 19,037 $ 18,524 68,000 68,000 50,000 8,500 8,500 5,556 54,850 32,229 31,774 $ 153,806 $ 127,766 $ 105,854arrow_forwardprovide correct answer mearrow_forwardgeneral accountingarrow_forward
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