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Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows: The inventory at January 1, 2019, had
Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows:
- The inventory at January 1, 2019, had a retail value of $31,000 and a cost of $11,000 based on the conventional retail method.
- Transactions during 2019 were as follows:
Cost | Retail | |||||
Gross purchases | $ | 570,000 | $ | 953,000 | ||
Purchase returns | 6,000 | 4,000 | ||||
Purchase discounts | 5,000 | |||||
Gross sales | 958,000 | |||||
Sales returns | 5,000 | |||||
Employee discounts | 3,000 | |||||
Freight-in | 20,000 | |||||
Net markups | 20,000 | |||||
Net markdowns | 4,000 | |||||
Sales to employees are recorded net of discounts.
- The retail value of the December 31, 2020, inventory was $48,150, the cost-to-retail percentage for 2020 under the LIFO retail method was 42%, and the appropriate price index was 107% of the January 1, 2020, price level.
- The retail value of the December 31, 2021, inventory was $43,450, the cost-to-retail percentage for 2021 under the LIFO retail method was 41%, and the appropriate price index was 110% of the January 1, 2020, price level.
Required: 3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2020. Estimating ending inventory for 2020 and 2021.
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