Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help just with question 2 and 3. I posted 2 separetally. Please help me with #3. Raleigh Department Store converted from the conventional

I need help just with question 2 and 3. I posted 2 separetally. Please help me with #3.

Raleigh Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2014, and is now considering converting to the dollar-value LIFO retail inventory method. Management requested, during your examination of the financial statements for the year ended December 31, 2016, that you furnish a summary showing certain computations of inventory costs for the past three years. Available information follows:

a.

The inventory at January 1, 2014, had a retail value of $36,000 and a cost of $29,570 based on the conventional retail method.

b. Transactions during 2014 were as follows:

Cost Retail
Gross purchases $ 165,860 $ 400,000
Purchase returns 5,600 29,000
Purchase discounts 4,100
Gross sales 323,000
Sales returns 10,000
Employee discounts 3,500
Freight-in 30,000
Net markups 16,000
Net markdowns 29,000

Sales to employees are recorded net of discounts.
c.

The retail value of the December 31, 2015, inventory was $87,450, the cost-to-retail percentage for 2015 under the LIFO retail method was 67%, and the appropriate price index was 106% of the January 1, 2015, price level.

d.

The retail value of the December 31, 2016, inventory was $45,235, the cost-to-retail percentage for 2016 under the LIFO retail method was 66%, and the appropriate price index was 109% of the January 1, 2015, price level.

Required:
1.

Prepare a schedule showing the computation of the cost of inventory at December 31, 2014, based on the conventional retail method. (Amounts to be deducted should be indicated by a minus sign.)

Cost Retail Cost-to-Retail Ratio
Beginning inventory
0
Cost-to-retail percentage
Goods available for sale $0 0
Estimated ending inventory at retail $0
Estimated ending inventory at cost

2.

Prepare a schedule showing the computation of the cost of inventory at December 31, 2014, based on the LIFO retail method.

Cost Retail Cost-to-Retail Ratio
Beginning inventory
Goods available for sale (excluding beginning inventory)
Goods available for sale (including beginning inventory) 0 0
Cost-to-retail percentage
Estimated ending inventory at retail $0
Estimated ending inventory at cost

3.

Calculate the cost of inventory for December 31, 2015 and 2016, based on the dollar-value LIFO retail method.

Total ending inventory at dollar-value LIFO retail cost, 2015
Total ending inventory at dollar-value LIFO retail cost, 2016

I need help just with question 2 and 3. I posted 2 separetally. Please help me with #3.

Calculate the cost of inventory for December 31, 2015 and 2016, based on the dollar-value LIFO retail method.

Total ending inventory at dollar-value LIFO retail cost, 2015
Total ending inventory at dollar-value LIFO retail cost, 2016

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Guide To Auditing Programmes And Projects

Authors: Andrew Schuster, APM Assurance SIG

1st Edition

191330521X, 978-1913305215

More Books

Students also viewed these Accounting questions

Question

Evaluate the importance of the employee handbook.

Answered: 1 week ago

Question

Discuss the steps in the progressive discipline approach.

Answered: 1 week ago