Chapter 9, Problem 25E

To determine

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.

To determine

(b)

To compute: To compute the cost of the 2017 ending inventory under the LIFO retail method.