Cost Retail $32,500 130,000 Inventory, January 1 Purchases Markups (net) Markdowns (net) Sales Required: $65,000 235,364 4,000 3,000 180,000 - 1. Compute the ending inventory by the retail inventory method for the following cost flow assumption: FIFO. Round the cost-to-retail ratio to three decimal p HARMES COMPANY Calculation of ending inventory by retail inventory method FIFO Cost 130.000 Purchases Add: Markups (net) Less: Markdowns (net) $130,000 2.36,364 Cost-to-retail ratio: Beginning inventory Goods available for sale Less: Sales HARMES COMPANY Calculation of ending inventory by retail inventory method Average Cost Cost Retail Beginning inventory 32,500 65,000 Purchases 130,000 235,364 Add: Markups (net) 4,000 Less: Markdowns (net) 0 V 3,000 Goods available for sale 301,364 Cost-to-retail ratio Less: Sales 0 $ 162,500 180,000 $121,364 Ending inventory x | HARMES COMPANY Calculation of ending inventory by retail inventory method LIFO Cost Retail Beginning inventory $32,500 $ 65,000 Cost-to-retail ratio Purchases 130,000 235,364 Add: Markups (net) 4,000 L 130,000 Less: Markdowns (net) 3,000 Goods available for sale 162,500 $ 301,364 Cost-to-retail ratio Less: Sales 180,000 Ending inventory 121,364 O Costa HARMES COMPANY Calculation of ending inventory by retail inventory method Lower of Cost or Market (based on average cost) Retail Beginning inventory 32,500 $ 65,000 Purchases 130,000 235,364 Add: Markups (net) TI // S 0 D 000 AO > I I I $ 162,500 / 12 $ 304,364 SA Cost-to-retail ratio Less: Markdowns (net) / 0 000's 17 7 / Goods available for sale 3 04/ 162,500 o Less: Sales $ 301,364 180,000 $ 121,364 V 000081 A 1 Ending inventory