Problem 4

Lucas Co. operates a ready-to-wear (RTW) department store in downtown Manila. Because of the observable pattern between its cost and retail price, Lucas Co. used retail inventory method of estimating its inventory for interim reporting as of and for the 3 months period ending 30 September 2020. The records of Lucas Co. shows the following:

Beginning inventory at cost	P 85,000
Beginning inventory at retail	106,250
Net purchases at cost	95,628
Net purchases at retail	139,880
Net mark up	25,000
Net mark down	5,500
Net sales	60,000
Sales discount	3,000
Sales returns	4,000
Sales allowance	2,000
Employee discount	5,000
Theft and shrinkage (normal)	1,500

1. Using FIFO retail inventory method, Lucas Co.s ending inventory as of 30 September 2020 is

1. P123,428
2. P116,478
3. P132,428
4. P114,678