Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during 2013:

Inventory, January 1	$28,500	$40,500
Purchases	68,400	95,600
Markups (net)		2,200
Markdowns (net)		400
Sales		85,700

Required:

Hide

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 2013
Cost	Retail
Add: Sales Cash Less: Beginning inventory Purchases Add: Markups (net) Less: Markdowns (net) Add: Beginning inventory Goods available for sale Less: Sales Ending inventory at retail Ending inventory at cost Correct 6 of Item 1	$ Correct 7 of Item 1	$ Correct 8 of Item 1
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markups (net) Add: Beginning inventory Goods available for sale Less: Sales Ending inventory at retail Ending inventory at cost Correct 9 of Item 1	Correct 10 of Item 1
Add: Sales Cash Less: Beginning inventory Add: Markdowns (net) Less: Markdowns (net) Add: Beginning inventory Goods available for sale Less: Sales Ending inventory at retail Ending inventory at cost Correct 11 of Item 1	Correct 12 of Item 1
$ Correct 13 of Item 1	$ Correct 14 of Item 1
Add: Sales Cash Less: Beginning inventory Purchases Markups (net) Markdowns (net) Add: Beginning inventory Less: Sales Ending inventory at retail Ending inventory at cost Correct 15 of Item 1	Correct 16 of Item 1	Correct 17 of Item 1
Add: Sales Cash Less: Beginning inventory Purchases Markups (net) Markdowns (net) Goods available for sale Ending inventory at retail Ending inventory at cost Correct 18 of Item 1	$ Correct 19 of Item 1	$ Correct 20 of Item 1
Add: Sales Cash Less: Beginning inventory Purchases Markups (net) Markdowns (net) Less: Sales Ending inventory at retail Ending inventory at cost Correct 21 of Item 1	Correct 22 of Item 1
Add: Sales Cash Less: Beginning inventory Purchases Markups (net) Markdowns (net) Add: Beginning inventory Goods available for sale Less: Sales Ending inventory at retail Correct 23 of Item 1	$ Correct 24 of Item 1
Add: Sales Cash Less: Beginning inventory Purchases Markups (net) Markdowns (net) Add: Beginning inventory Goods available for sale Less: Sales Ending inventory at cost Correct 25 of Item 1	$ Correct 26 of Item 1

Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution

Hide

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 2013
Cost	Retail
Add: Sales Cash Less: Beginning inventory Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at retail Ending inventory at cost Correct 6 of Item 2	$ Correct 7 of Item 2	$ Correct 8 of Item 2
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Goods available for sale Less: Sales Ending inventory at retail Ending inventory at cost Correct 9 of Item 2	Correct 10 of Item 2	Correct 11 of Item 2
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markdowns (net) Goods available for sale Less: Sales Add: Markups (net) Ending inventory at retail Ending inventory at cost Correct 12 of Item 2	Correct 13 of Item 2
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markdowns (net) Goods available for sale Less: Sales Less: Markdowns (net) Ending inventory at retail Ending inventory at cost Correct 14 of Item 2	Correct 15 of Item 2
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Ending inventory at retail Ending inventory at cost Correct 16 of Item 2	$ Correct 17 of Item 2	$ Correct 18 of Item 2
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Correct 19 of Item 2	Correct 20 of Item 2
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at retail Correct 21 of Item 2	$ Correct 22 of Item 2
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at cost Correct 23 of Item 2	$ Correct 24 of Item 2

Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution

Hide

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 2013
Cost	Retail
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Ending inventory at retail Ending inventory at cost Correct 6 of Item 3	$ Correct 7 of Item 3	$ Correct 8 of Item 3
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Goods available for sale Less: Sales Ending inventory at retail Ending inventory at cost Correct 9 of Item 3	Correct 10 of Item 3	Correct 11 of Item 3
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Ending inventory at retail Ending inventory at cost Correct 12 of Item 3	Correct 13 of Item 3
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Less: Markdowns (net) Ending inventory at retail Ending inventory at cost Correct 14 of Item 3	Correct 15 of Item 3
$ Correct 16 of Item 3
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Add: Markups (net) Less: Markdowns (net) Correct 17 of Item 3	$ Correct 18 of Item 3	$ Correct 19 of Item 3
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Less: Sales Add: Markups (net) Less: Markdowns (net) Correct 20 of Item 3	Correct 21 of Item 3
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at retail Correct 22 of Item 3	$ Correct 23 of Item 3
Ending inventory at LIFO cost
Beginning layer (as stated in data)	$ 28,500
New layer	Correct 28 of Item 3
Total	$ Correct 30 of Item 3

Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution

Hide

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) 2013
Cost	Retail
Add: Sales Cash Less: Beginning inventory Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Less: Markdowns (net) Ending inventory at retail Ending inventory at cost Correct 6 of Item 4	$ Correct 7 of Item 4	$ Correct 8 of Item 4
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Goods available for sale Less: Sales Less: Markdowns (net) Ending inventory at retail Ending inventory at cost Correct 9 of Item 4	Correct 10 of Item 4	Correct 11 of Item 4
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at retail Ending inventory at cost Correct 12 of Item 4	Correct 13 of Item 4
$ Correct 14 of Item 4	$ Correct 15 of Item 4
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Add: Markups (net) Less: Markdowns (net) Correct 16 of Item 4	Correct 17 of Item 4
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Less: Sales Add: Markups (net) Ending inventory at retail Ending inventory at cost Correct 18 of Item 4	Correct 19 of Item 4
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at retail Correct 20 of Item 4	$ Correct 21 of Item 4
Add: Sales Cash Less: Beginning inventory Purchases Less: Markups (net) Add: Markdowns (net) Beginning inventory Goods available for sale Less: Sales Add: Markups (net) Less: Markdowns (net) Ending inventory at LCM Correct 22 of Item 4	$ Correct 23 of Item 4