# Intermediate Accounting I 4a 3

Question 1 (E 9-19)

 Cost Retail Beginning inventory 71280 132000 Add: net purchases 112500 255000 Add: net markups 6000 Less: net markdowns (11000) Goods available for sale (excluding beginning inventory) 112500 250,000 Goods available for sale (including beginning inventory) 183,780 382,000 Less: net sales 0 (232,000) Estimated ending inventory at retail \$150,000 Estimated ending inventory at cost (below) \$77,004 Estimated cost of goods sold \$106,776

Note

Cost to retail ratio (base year) = 71280/132000= 54%

Cost to retail ratio (2011) = 112500/250000 = 45%

Ending inventory at year-end retail prices = \$150,000

Ending inventory at base year retail prices = \$150,000/1.04 =\$144,230.77

Inventory layers converted to cost

\$132,000*1.00*54% = \$71280

\$12,230.77*1.04*45% = \$5724

Total ending inventory at dollar-value LIFO retail cost =  \$71280+\$5724= \$77,004

Question 2 (E 9-21)

 Cost Retail Merchandise  inventory, January 1, 2011 160000 250,000 Add: net purchases 350,200 510,000 Add: net markups 7000 Less: net markdowns (2000) Goods available for sale (excluding beginning inventory) 160,000 515,000 Goods available for sale (including beginning inventory) 510,200 765,000 Less: net sales 0 (380,000) Estimated ending inventory at retail \$385,000 Estimated ending inventory at cost (below) \$194,177 Estimated cost of goods sold \$316,023

Note

Cost to retail ratio (base year) = 160000/250000= 64%

Cost to retail ratio (2011) = 160000/515000 = 31.07%

Ending inventory at year-end retail prices = \$385,000

Ending inventory at base year retail prices = \$385,000/1.10 =\$350,000

Inventory layers converted to cost

\$250,000*1.00*0.64 = \$160,000

\$100,000*1.10*0.3107% = \$34,177

Total ending inventory at dollar-value LIFO retail cost = \$160,000 + \$34,177= \$194,177

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