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AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 8, Problem 7RE
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 18GI
Problem 19GI
Problem 20GI
Problem 21GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
Problem 7RE
Problem 8RE
Problem 9RE
Problem 10RE
Problem 11RE
Problem 12RE
Problem 13RE
Problem 14RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 16E
Problem 17E
Problem 18E
Problem 19E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 13P
Problem 14P
Problem 15P
Problem 16P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
Problem 7C
Problem 8C
Problem 10C
Problem 11C
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Uncle Butch’s Hunting Supply Shop reports the following information related to inventory:

Chapter 8, Problem 7RE, Uncle Butchs Hunting Supply Shop reports the following information related to inventory: Calculate

Calculate Uncle Butch’s’ ending inventory using the retail inventory method under the FIFO cost flow assumption. Round the cost-to-retail ratio to 3 decimal places.

To determine

Compute the ending inventory using the retail inventory method under the FIFO cost flow assumption.

Explanation

Retail inventory method: This method is like a gross profit method. It is depends on the relationship between cost and selling price of the product , for the purpose of estimate the value of ending inventory and cost of goods sold.

It takes into account all the retail amounts that is, the current selling prices. Under this method, the goods available for sale, at retail is deducted from the sales, at retail to determine the ending inventory, at retail.

FIFO: Under this inventory method, the units that are purchased first are sold first. Thus, it starts from the selling of the beginning inventory, followed by the units purchased in a chronological order of their purchases took place during a particular period.

Compute the ending inventory using the retail inventory method under the FIFO cost flow assumption.

Ending Inventory - FIFO
DetailsCost ($)Retail ($)
Purchases75,000200,000
Markups (net) 15,000
Markdowns0(22,000)
Goods available for sale after markdowns75,000193,000
Add: Beginning inventory35,00092,000
Goods available for sale110,000285,000
Less: Sales (178,000)
Ending inventory at retail $107,000
Ending inventory at cost$41,623 

Table (1)

Working note 1:

Calculate ending inventory at cost:

Step 1: Calculate cost-to-retail ratio...

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Ch-8 P-1GICh-8 P-2GICh-8 P-3GICh-8 P-4GICh-8 P-5GICh-8 P-6GICh-8 P-7GICh-8 P-8GICh-8 P-9GICh-8 P-10GI
Ch-8 P-11GICh-8 P-12GICh-8 P-13GICh-8 P-14GICh-8 P-15GICh-8 P-16GICh-8 P-17GICh-8 P-18GICh-8 P-19GICh-8 P-20GICh-8 P-21GICh-8 P-1MCCh-8 P-2MCCh-8 P-3MCCh-8 P-4MCCh-8 P-5MCCh-8 P-6MCCh-8 P-7MCCh-8 P-8MCCh-8 P-9MCCh-8 P-10MCCh-8 P-1RECh-8 P-2RECh-8 P-3RECh-8 P-4RECh-8 P-5RECh-8 P-6RECh-8 P-7RECh-8 P-8RECh-8 P-9RECh-8 P-10RECh-8 P-11RECh-8 P-12RECh-8 P-13RECh-8 P-14RECh-8 P-1ECh-8 P-2ECh-8 P-3ECh-8 P-4ECh-8 P-5ECh-8 P-6ECh-8 P-7ECh-8 P-8ECh-8 P-9ECh-8 P-10ECh-8 P-11ECh-8 P-12ECh-8 P-13ECh-8 P-14ECh-8 P-15ECh-8 P-16ECh-8 P-17ECh-8 P-18ECh-8 P-19ECh-8 P-1PCh-8 P-2PCh-8 P-3PCh-8 P-4PCh-8 P-5PCh-8 P-6PCh-8 P-7PCh-8 P-8PCh-8 P-9PCh-8 P-10PCh-8 P-11PCh-8 P-12PCh-8 P-13PCh-8 P-14PCh-8 P-15PCh-8 P-16PCh-8 P-1CCh-8 P-2CCh-8 P-3CCh-8 P-4CCh-8 P-5CCh-8 P-6CCh-8 P-7CCh-8 P-8CCh-8 P-10CCh-8 P-11C

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