Question
The Smith Company uses the retail inventory method to estimate inventory for interim financial statements. The following inventory information is available: Cost Retail Beginning inventory
The Smith Company uses the retail inventory method to estimate inventory for interim financial statements. The following inventory information is available:
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| Cost | Retail |
| Beginning inventory | $12,500 | $15,000 |
| Purchases | 38,500 | 59,000 |
| Freight-in | 500 |
|
| Purchase returns | 1,800 | 3,000 |
| Net markups |
| 7,050 |
| Sales |
| 51,500 |
| Net markdowns |
| 1,050 |
Required:
a. Determine the inventory value using the retail inventory method and the FIFO cost flow assumption.
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b. Determine the inventory value using the retail inventory method and the LIFO cost flow assumption.
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