Retail Inventory Method

Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during 2016:

	Cost	Retail
Inventory, January 1	$30,000	$40,700
Purchases	65,000	98,600
Markups (net)		1,500
Markdowns (net)		300
Sales		82,600

Required:

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. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
FIFO 2016
	Cost	Retail
Add: Beginning inventory	$	$
	$	$
	$	$
		$
	$

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. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
Average Cost 2016
	Cost	Retail
	$	$
	$	$
		$
	$

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. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
LIFO 2016
	Cost	Retail
	$	$
		$
	$	$
		$
Ending inventory at LIFO cost
Beginning layer (as stated in data)	$30,000
New layer
Total	$

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. If necessary, round dollar amounts to the nearest whole dollar.

HARMES COMPANY
Calculation of ending inventory by retail inventory method
Lower of Cost or Market (based on average cost) 2016
	Cost	Retail
	$	$
	$	$
		$
	$