Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The...

Transcribed Image Text:

Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during the year: Inventory, January 1 Purchases Markups (net) Markdowns (net) Sales Required: Cost Retail $32,500 $65,000 130,000 215,667 4,000 3,000 190,000 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Purchases Addi Markups (net) Lessi Markdowns (net) FIFO Cost Retail 130,000 215,667 4,000 0 3,000 130,000 216,667 Cost-to-retail ratio: 0.6000 Beginning inventory 32,500 65,000 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Average Cost Cost Retail Beginning inventory 32,500 65,000 Purchases Add Markups (net) 130,000 215,667 0 4,000 V Less: Markdowns (net) 0 3,000 Goods available for sale. 162,500 281,667 V Cost-to-retail ratio 0.5769 X Less: Sales 0 190,000 Ending inventory 55,000 X 91,667 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. HARMES COMPANY Calculation of ending inventory by retail inventory method LIFO Beginning inventory Cost Retail 32,500 $ 65,000 Cost-to-retail ratio : 03 Purchases Add: Markups (net) 130,000 215,667 0 4,000 Less: Markdowns (net) 0 3,000 Goods available for sale. 162,500 281,667 V Cost-to-retail ratio 0.5769 X Less Sales 0 190,000 Ending inventory 55,885 X 91,667 V 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Lower of Cost or Market (based on average cost) Beginning inventory Purchases Addi Markups (net) Cost-to-retail ratio Less Markdowns (net) Goods available for sale Less Sales Ending inventory Cost Retail 32,500 V 65,000 130,000 215,667 0 4,000 162,300 264,667 0.175 x 0 1,000 162,500 281,667 0 190,000 55,000 X 91,667 Retail Inventory Method Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during the year: Inventory, January 1 Purchases Markups (net) Markdowns (net) Sales Required: Cost Retail $32,500 $65,000 130,000 215,667 4,000 3,000 190,000 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Purchases Addi Markups (net) Lessi Markdowns (net) FIFO Cost Retail 130,000 215,667 4,000 0 3,000 130,000 216,667 Cost-to-retail ratio: 0.6000 Beginning inventory 32,500 65,000 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Average Cost Cost Retail Beginning inventory 32,500 65,000 Purchases Add Markups (net) 130,000 215,667 0 4,000 V Less: Markdowns (net) 0 3,000 Goods available for sale. 162,500 281,667 V Cost-to-retail ratio 0.5769 X Less: Sales 0 190,000 Ending inventory 55,000 X 91,667 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. HARMES COMPANY Calculation of ending inventory by retail inventory method LIFO Beginning inventory Cost Retail 32,500 $ 65,000 Cost-to-retail ratio : 03 Purchases Add: Markups (net) 130,000 215,667 0 4,000 Less: Markdowns (net) 0 3,000 Goods available for sale. 162,500 281,667 V Cost-to-retail ratio 0.5769 X Less Sales 0 190,000 Ending inventory 55,885 X 91,667 V 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. HARMES COMPANY Calculation of ending inventory by retail inventory method Lower of Cost or Market (based on average cost) Beginning inventory Purchases Addi Markups (net) Cost-to-retail ratio Less Markdowns (net) Goods available for sale Less Sales Ending inventory Cost Retail 32,500 V 65,000 130,000 215,667 0 4,000 162,300 264,667 0.175 x 0 1,000 162,500 281,667 0 190,000 55,000 X 91,667