Retail Inventory Method EKC Company uses the retail inventory method. The following information for 2019 is available: Cost Retail Cost Retail $100,000 $180,000 Markup cancellations 12,000 320,000 600,000 Markdowns - 15,000 Inventory, January 1 Purchases (gross price) Purchases discounts taken Freight-in Additional markups Required: 6,000 Markdown cancellations - 4,000 16,000 Net Sales - 580,000 - 60,000 1. Compute the cost of the ending inventory under the FIFO method. Round the cost-to-retail ratio to three decimal places and the final answers to the nearest dollar. EKC COMPANY Calculation of ending inventory by retail inventory method FIFO For the year 2019 Cost Retail Purchases $ 314,000 $ 600,000 Add: Freight-in X 16,000 X Markdowns X Net additional markups Net markdowns Beginning inventory Goods available for sale Less: Net sales Ending inventory at retail Ending inventory at cost 2. Compute the cost of the ending inventory under the average cost method. Round the cost-to- retail ratio to three decimal places and the final answers to the nearest dollar. EKC COMPANY Calculation of ending inventory by retail inventory method Average Cost For the year 2019 Cost Retail Beginning inventory Purchases Add: Freight-in X Markdowns X Net additional markups Goods available for sale x Less: Net sales Ending inventory at retail Ending inventory at cost 3. Compute the cost of the ending inventory under the LIFO method. Round the cost-to-retail ratio to three decimal places and the final answers to the nearest dollar. EKC COMPANY Calculation of ending inventory by retail inventory method LIFO For the year 2019 Cost Retail Beginning inventory Purchases Add: Freight-in X Markdowns X Net additional markups Net markdowns Goods available for sale Less: Net sales Ending inventory at retail Ending inventory at cost 4. Compute the cost of the ending inventory under the lower of cost or market method (based on average cost). Round the cost-to-retail ratio to three decimal places and the final answers to the nearest dollar. EKC COMPANY Calculation of ending inventory by retail inventory method Lower of Cost or Market (based on average cost) For the year 2019 Cost Retail Beginning inventory Purchases Add: Freight-in X Markdowns X Net additional markups Add: Net additional markups X Sales X Ending inventory at retail Ending inventory at cost