Dollar-Value-LIFO: This method shows all the inventory figures at dollar price rather than units. Under this inventory method, the units that are purchased last, are sold first. Thus, it starts from the selling of the units recently purchased and ending with the beginning inventory.
To Determine: the cost-to-retail percentage for the inventory on hand at 1/1/2018.
Explanation of Solution
Determine the cost-to-retail percentage for the inventory on hand at 1/1/2018.
Conclusion:
Therefore, the cost-to-retail percentage for the inventory on hand at 1/1/2018 is 75%.
To Determine: the cost-to-retail percentage for the inventory on hand at 12/31/2018.
Solution:
Determine the cost-to-retail percentage for the inventory on hand at 12/31/2018.
Working notes:
Calculate the amount of ending inventory at base year retail prices.
Calculate the amount of inventory layers at base year retail prices.
Calculate the amount of inventory layers at current year retail prices.
Calculate the amount of inventory layers converted to cost (Base).
Calculate the amount of inventory layers added at current year retail (2018).
Calculate the amount of inventory layers added at current year cost (2018).
Conclusion:
Therefore, the cost-to-retail percentage for the inventory on hand at 12/31/2018 is 80%.
To Determine: the ending inventory for 2019.
Solution:
Calculate the amount of estimated ending inventory for 2019.
| Details | Cost ($) | Retail ($) |
| Beginning inventory | 22,792 | 33,600 |
| Add: Net purchases | 60,000 | 88,400 |
| Goods available for sale – Including beginning inventory | 82,792 | 122,000 |
| Less: Net sales | (80,000) | |
| Estimated ending inventory at current year retail prices | 42,000 | |
| Estimated ending inventory at cost | 26,864 |
Table (1)
Working notes:
Calculate current year layer (2018) cost-to retail percentage.
Calculate the amount of estimated ending inventory at cost.
| Ending inventory at dollar-value LIFO retail cost | ||||
| Step 1 | Step 2 | Step 3 | ||
| Ending inventory at year-end retail prices ($) | Ending inventory at base year retail prices ($) | Inventory layers at base year retail prices ($) | Inventory layers converted to cost ($) | |
| 42,000 (refer Table 1) | 35,000 (9) | 28,000 (Base)(3) | 21,000 (11) | |
| 2,000 (2018)(4) | 1,792 (7) | |||
| 5,000 (2019)(10) | 4,072 (12) | |||
| Total ending inventory at dollar-value LIFO retail cost | $26,864 | |||
Table (2)
Calculate the amount of ending inventory at base year retail prices.
Calculate the amount of inventory layers at current year retail prices.
Calculate the amount of inventory layers converted to cost (Base).
Calculate the amount of inventory layers converted to cost (2019).
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Chapter 9 Solutions
GEN COMBO INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage