Concept explainers
1.
LIFO
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.
Retail inventory method
It takes into account all the retail amounts that is, the current selling prices. Under this method, the goods available for sale, at retail is deducted from the sales, at retail to determine the ending inventory, at retail.
Average cost method
Under this method, the cost of the goods available for sale is divided by the number of units available for sale during a particular period.
To State: the inventory methods that Company F uses to value its inventory.
2.
To State: the price index that the company uses in applying the retail inventory method.
3.
the income effect of using LIFO versus another method for the current fiscal year.
4.
To calculate: the company’s inventory turnover ratio for the fiscal year ended February 1, 2014.
5.
To describe: the accounting treatment required for the switch to the average cost method.
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