Please explain in detail Required Information[The following Information applies to the questions displayed below.]Ralelgh Department Store uses the conventional retall method for the year ended December 31, 2019. AvallableInformation follows:a. The Inventory at January 1, 2019, had a retal value of $39,000 and a cost of $31,130 based on the conventlonal retallmethod.b. Transactions during 2019 were as follows:CostRetailGross purchases$200,1505,900$430, 000Purchase returns26,e00Purchase discounts4,400Gross sales397,500Sales returns8,000Employee discountsFreight-inNet markupsNet markdowns2,5ee28,50019,00026,000Sales to employees are recorded net of discounts.C. The retail value of the December 31, 2020, Inventory was $49,290, the cost-to-retail percentage for 2020 under theLIFO retail method was 78%, and the appropriate price Index was 106% of the January 1, 2020, price level.d. The retail value of the December 31, 2021, Inventory was $46,870, the cost-to-retall percentage for 2021 under the LIFOretall method was 77%, and the appropriate price index was 109% of the January 1, 2020, price level.Requlred:2. Estimate ending Inventory for 2019 assuming Raleigh Department Store used the LIFO retail method. (Amounts to be deductedshould be Indlcated with a mlnus sign.)

Solution: Raleigh Department Store LIFO Retail Method Cost Retail Cost to Retail ratio…

. The inventory at January 1, 2019, had a retail value of $39,000 and a cost of $31,130 based on the conve method. Transactions during 2019 were as follows: Cost Retail Gross purchases $200,15e $43e,e00 Purchase returns 5,900 4,400 26, eee Purchase discounts 397, see 8,e0e Gross sales Sales returns Employee discounts Freight-in 2, see 28, see 19,e0e 26,e00 Net markups Net markdowns ales to employees are recorded net of discounts.

. The inventory at January 1, 2019, had a retail value of $39,000 and a cost of $31,130 based on the conve method. Transactions during 2019 were as follows: Cost Retail Gross purchases $200,15e $43e,e00 Purchase returns 5,900 4,400 26, eee Purchase discounts 397, see 8,e0e Gross sales Sales returns Employee discounts Freight-in 2, see 28, see 19,e0e 26,e00 Net markups Net markdowns ales to employees are recorded net of discounts.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 6E: Inventory Write-Down The inventories of Berry Company for the years 2019 and 2020 are as follows:...

See similar textbooks

Similar questions

Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the allowance method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
Webster Company adopted do liar-value LIFO on January 1, 2019. Webster produces three products: X, Y, and Z. Websters beginning inventory consisted of the following: During 2019, Webster had the following purchases and sales: Required: 1. Compute the LIFO cost of the ending inventory assuming Webster uses a single inventory pool. Round cost index to 4 decimal places. 2. Compute the LIFO cost of the ending inventory assuming Webster uses three inventory pools. Round cost indexes to 4 decimal places.
The moving average inventory cost flow assumption is applicable to which of the following inventory systems? Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019.
At December 31, 2019, the following information was available from Crisford Companys books: Sales for the year totaled 110,600; markdowns amounted to 1,400. Under the approximate lower of average cost or market retail method, Crisfords inventory at December 31, 2019, was: a. 30,800 b. 28.000 c. 21,560 d. 19,600
Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Olsons records: Required: 1. Calculate the dollar-value LIFO inventory at the end of each year. 2. Prepare the appropriate disclosures for the 2021 annual report if Olson uses current cost internally and LIFO for financial reporting.
At the end of 2019, Manny Company recorded its ending inventory at 350,000 based on a physical count. During 2020, the company discovered that the correct inventory value at the end of 2019 should have been 400,000 because it made a counting error. Upon discovery of this error in 2020, what correcting journal entry will Manny make? Ignore income taxes.
Borys Companys periodic inventory at December 31, 2019, is understated by 10,000, but purchases are correct. Johnson correctly values its 2020 ending inventory. What is the effect of this error on Boryss 2019 and 2020 financial statements?
Cost of Goods Sold, Income Statement. and Statement of Comprehensive Income Gaskin Company derives the following items from its adjusted trial balance as of December 31, 2019: The following; additional information is also available. The December 31, 2019, ending inventory is 14,700. During 2019, 4,200 shares of'common stock were outstanding the entire year. The income tax rate 30% on all items of income. Required: 1. As a supporting document for Requirements 2 and 3, prepare a separate schedule for Gaskins cost of goods sold. 2. Prepare a 2019 single-step income statement. 3. Prepare a 2019 multiple-step income statement. 4. Prepare a 2019 statement of comprehensive income.
Grimstad Company uses FIFO for internal reporting purposes and LIFO for financial reporting and income tax purposes. At the end of 2019, the following information was obtained from the inventory records: Required: 1. Prepare the necessary adjusting journal entry assuming that Grimstad converts the accounts to LIFO at the end of 2019. 2. Indicate how Grimstad would disclose the inventory value on its comparative balance sheets prepared at the end of 2019. 3. Next Level By how much would Grimstads cost of goods sold differ in 2019 if it used FIFO for external reporting?
Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Lower of Cost or Market Sue Stone, the president of Tippecanoe Home Products, has prepared the following information for the companys television inventory at the end of 2019: Required: 1. Determine the carrying amount of the inventory using lower of cost or market applied on an item-by-item basis. 2. Prepare the journal entry required to value the inventory at lower of cost or market. 3. CONCEPTUAL CONNECTION What is the impact of applying the lower of cost or market rule on the financial statements of the current period? What is the impact on the financial statements of a subsequent period in which the inventory is sold?
On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Instructions 1. Does Simkins Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2019. The merchandise inventory as of June 30, 2019, was 508,000. The adjustment for estimated returns inventory for sales for the year ending December 31, 2019, was 33,000. 3. Prepare the closing entries for Simkins Company as of June 30, 2019. 4. What would the net income have been if the perpetual inventory system had been used?