Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Available information follows: The inventory at January 1, 2016, had a retail value of $36,000 and a cost of $29,570 based on the conventional retail method.Transactions during 2016 were as follows: CostRetailGross purchases$165,860 $400,000 Purchase returns 5,600  29,000 Purchase discounts 4,100    Gross sales    323,000 Sales returns    10,000 Employee discounts    3,500 Freight-in 30,000    Net markups    16,000 Net markdowns    29,000   Sales to employees are recorded net of discounts.The retail value of the December 31, 2017, inventory was $87,450, the cost-to-retail percentage for 2017 under the LIFO retail method was 67%, and the appropriate price index was 106% of the January 1, 2017, price level.The retail value of the December 31, 2018, inventory was $41,965, the cost-to-retail percentage for 2018 under the LIFO retail method was 66%, and the appropriate price index was 109% of the January 1, 2017, price level. Required:1. Estimate ending inventory for 2016 using the conventional retail method.2. Estimate ending inventory for 2016 assuming Raleigh Department Store used the LIFO retail method.3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2017. Estimating ending inventory for 2017 and 2018.Estimate ending inventory for 2016 assuming Raleigh Department Store used the LIFO retail method.these are the right number I'm having a hard time figuring out DVL in retail cost 2017 ???Inventory at 2016 –Conventional Retail Method = Retail @ 77,500 Cost @ 39,525LIFO Retail Method                 = Retail @ 77,500 Cost @ 51,150 Inventory at 2017 using Dollar Value LIFO method =??Inventory at 2018 using Dollar Value LIFO method = $25,410

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Asked Apr 6, 2019
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Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Available information follows:
 

  1. The inventory at January 1, 2016, had a retail value of $36,000 and a cost of $29,570 based on the conventional retail method.
  2. Transactions during 2016 were as follows:
  Cost Retail
Gross purchases $ 165,860   $ 400,000  
Purchase returns   5,600     29,000  
Purchase discounts   4,100        
Gross sales         323,000  
Sales returns         10,000  
Employee discounts         3,500  
Freight-in   30,000        
Net markups         16,000  
Net markdowns         29,000  
 

 
Sales to employees are recorded net of discounts.

  1. The retail value of the December 31, 2017, inventory was $87,450, the cost-to-retail percentage for 2017 under the LIFO retail method was 67%, and the appropriate price index was 106% of the January 1, 2017, price level.
  2. The retail value of the December 31, 2018, inventory was $41,965, the cost-to-retail percentage for 2018 under the LIFO retail method was 66%, and the appropriate price index was 109% of the January 1, 2017, price level.

 
Required:
1. Estimate ending inventory for 2016 using the conventional retail method.
2. Estimate ending inventory for 2016 assuming Raleigh Department Store used the LIFO retail method.
3. Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2017. Estimating ending inventory for 2017 and 2018.

Estimate ending inventory for 2016 assuming Raleigh Department Store used the LIFO retail method.

these are the right number I'm having a hard time figuring out DVL in retail cost 2017 ???

Inventory at 2016 –

Conventional Retail Method = Retail @ 77,500 Cost @ 39,525

LIFO Retail Method                 = Retail @ 77,500 Cost @ 51,150

 

Inventory at 2017 using Dollar Value LIFO method =??

Inventory at 2018 using Dollar Value LIFO method = $25,410

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Expert Answer

Step 1

Under Convectional Retail Method 2016 Ending Invetory Has been computed as below

 CostRetail
Beginning Inventory29,57036,000
Net Purchases(less Purchase Return and discount add freight)186,160371,000
Add Markup 16,000
Inventory available for sale215,730423,000
Ratio of Cost to retail (215730/423000=0.51)  
Less Markdowns (29,000)
Less. Net sales (316500)
Ending Inventory at retail 77,500
Cost to Retail Ratio 0.51
Ending Invetory at cost 39,525

 

Step 2

Under LIFO Retail method, the ending inventory for 2016 has been calculated as beiow

 CostRetail
Net Purchases 186,160371,000
Add Markups 16,000
Less Markdowns (29,000)
Total (without beginning Inventory)186,160358,000
Ratio of cost to retail (186,160/358,000=0.52)  
Ending Inventory at retail under convectional method 77,500
Cost to retail ratio 0.52
Ending inventory at cost LIFO retail 40,300

3.

3. The retail value of invetory on Dec 31, 2017=$87,450

Cost to retail %=67%

So, cost of inventory on Dec 31=87,450*67%=$58,591.5

 

Step 3

3. The retail value of invetory on Dec 31, 2017=$87,450

Cost to retail %=67%

So...

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