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Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2021 operations is as follows: January 1, 2021, beginning
Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2021 operations is as follows:
- January 1, 2021, beginning inventory had a cost of $100,000 and a retail value of $150,000.
- Purchases during 2021 cost $1,387,500 with an original retail value of $2,000,000.
- Freight costs were $10,000 for incoming merchandise.
- Net additional markups were $300,000 and net markdowns were $150,000.
- Based on prior experience, shrinkage due to shoplifting was estimated to be $15,000 of retail value.
- Merchandise is sold to employees at a 20% of selling price discount. Employee sales are recorded in a separate account at the net selling price. The balance in this account at the end of 2021 is $250,000.
- Sales to customers totaled $1,750,000 for the year.
2. Estimate ending inventory and cost of goods sold using the LIFO retail method. (Assume stable prices.)
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