Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2020. Amounts as shown below appear on the store’s books before adjustment. Cost Retail Inventory, January 1, 2020 $ 15,800 $ 24,000 Purchases in 2020 116,200 184,000 Markups in 2020 12,000 Markdowns in 2020 5,500 Sales revenue in 2020 175,000 You are to assume that all markups and markdowns apply to 2020 purchases, and that it is appropriate to treat the entire inventory as a single department. Instructions Compute the inventory at December 31, 2020, under the following methods. a. The conventional retail method. b. The last-in, first-out retail method, effecting the change in method as of January 1, 2020. Assume that the cost-to-retail percentage for 2019 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.
Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2020. Amounts as shown below appear on the store’s books before adjustment. Cost Retail Inventory, January 1, 2020 $ 15,800 $ 24,000 Purchases in 2020 116,200 184,000 Markups in 2020 12,000 Markdowns in 2020 5,500 Sales revenue in 2020 175,000 You are to assume that all markups and markdowns apply to 2020 purchases, and that it is appropriate to treat the entire inventory as a single department. Instructions Compute the inventory at December 31, 2020, under the following methods. a. The conventional retail method. b. The last-in, first-out retail method, effecting the change in method as of January 1, 2020. Assume that the cost-to-retail percentage for 2019 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 3P: Koopman Company began operations on January 1, 2018, and uses they FIFO inventory method for...
Related questions
Question
Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2020.
Amounts as shown below appear on the store’s books before adjustment.
| Cost | Retail | |||
| Inventory, January 1, 2020 | $ 15,800 | $ 24,000 | ||
| Purchases in 2020 | 116,200 | 184,000 | ||
| Markups in 2020 | 12,000 | |||
| Markdowns in 2020 | 5,500 | |||
| Sales revenue in 2020 | 175,000 |
You are to assume that all markups and markdowns apply to 2020 purchases, and that it is appropriate to treat the entire inventory as a single department.
Instructions
Compute the inventory at December 31, 2020, under the following methods.
a. The conventional retail method.
b. The last-in, first-out retail method, effecting the change in method as of January 1, 2020. Assume that the cost-to-retail percentage for 2019 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College