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Retail Inventory Method

Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during the year:

Cost Retail

Inventory, January $1$ $$28,400$ $$40,200$

Purchases $65,200100,000$

Markups $($net$)1,900$

Markdowns $($net$)400$

Sales $80,000$

Required:

Question Content Area

$1.$ 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 places. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY

Calculation of ending inventory by retail inventory method

FIFO

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$2.$ Compute the ending inventory by the retail inventory method for the following cost flow assumption: Average cost. Round the cost$-$to$-$retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY

Calculation of ending inventory by retail inventory method

Average Cost

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$3.$ Compute the ending inventory by the retail inventory method for the following cost flow assumption: LIFO. Round the cost$-$to$-$retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY

Calculation of ending inventory by retail inventory method

LIFO

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$4.$ Compute the ending inventory by the retail inventory method for the following cost flow assumption: Lower of cost or market $($based on average cost$).$ Round the cost$-$to$-$retail ratio to three decimal places. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY

Calculation of ending inventory by retail inventory method

Lower of Cost or Market $($based on average cost$)$

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