INTERMEDIATE ACCOUNTING RMU 9TH EDITION
9th Edition
ISBN: 9781260998726
Author: SPICELAND
Publisher: MCG
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Chapter 9, Problem 9.12P
Retail inventory method; various applications
• LO9–3 through LO9–5
Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Available information follows:
- a. The inventory at January 1, 2016, had a retail value of $45,000 and a cost of $27,500 based on the conventional retail method.
- b. Transactions during 2016 were as follows:
| Cost | Retail | |
| Gross purchases | $282,000 | $490,000 |
| Purchase returns | 6,500 | 10,000 |
| Purchase discounts | 5,000 | |
| Gross sales | 492,000 | |
| Sales returns | 5,000 | |
| Employee discounts | 3,000 | |
| Freight-in | 26,500 | |
| Net mark-ups | 25,000 | |
| Net markdowns | 10,000 |
Sales to employees are recorded net of discounts.
- c. The retail value of the December 31, 2017, inventory was $56,100, the cost-to-retail percentage for 2017 under the LIFO retail method was 62%, and the appropriate price index was 102% of the January 1, 2017, price level.
- d. The retail value of the December 31, 2018, inventory was $48,300, the cost-to-retail percentage for 2018 under the LIFO retail method was 61%, and the appropriate price index was 105% 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.
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Part 2
The Kroger Company
Net sales
Cost of sales (using LIFO)
Year-end inventories using FIFO
Year-end inventories using LIFO
Required: Compute the following:
LIFO reserve is
Kroger uses the LIFO inventory method and sales and cost of sales are reported
above using LIFO.
Gross margin in dollars (LIFO)
Gross margin in dollars (FIFO)
LIFO Inventory turnover*
FIFO Inventory turnover*
January 31, 2015
108,465.00
Definitions
*Inventory turnover ratio=
Gross margin in dollars =
85,512
6,933
5,688
February 1, 2014 February 2, 2013
98,375.00
96,619.00
78,138
76,726
6,801
6,244
5,651
5,146
January 31, 2015 February 1, 2014 February 2, 2013
Cost of Sales/Year-end Inventory
Net Sales less cost of sales
85512
6933
5688
78138
6801
5651
76726
6244
5146
MC41 Syvels Trading uses the retail inventory method to estimate
inventory.
accounting records for the year ended December 31, 2019:
The following information was obtained from the
At cost: Inventory, January 1 – P617,000; Purchases - P1,281,000;
Purchase returns P21,000; Freight-in - P31,000.
At retail:
P2,158,000; Purchase returns
Sales returns - P62,000.
Purchases
P35,000; Sales - P2,365,000;
Inventory, January 1 P1,057,000%3;
How much is the cost of inventory pilferage if the physical count revealed an
ending inventory at retail of P780,000?
MC42 The following data is available for Corona Trading:
Cost
P 47,075
213,327
3,400
Retail
P 70,025
306,375
Inventory, January 1
Purchases (net)
Freight in
Sales
Additional markups
Cancellation of additional markups
320,500
18,900
7,800
10,640
Markdowns
Physical inventory, December 31,
at retail
39,390
Corona Trading uses the average retail method.
What is the cost of goods sold before loss on inventory shortage?
P248,355
P231,798
P225,175
P224,350
a.
b.
с.
d.
Chapter 9 Solutions
INTERMEDIATE ACCOUNTING RMU 9TH EDITION
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - It is discovered in 2018 that ending inventory in...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Dollar-value LIFO retail LO95 This exercise is a...Ch. 9 - Change i n inventory costing methods LO96 In...Ch. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Inventory error LO97 In 2018, Winslow...Ch. 9 - Inventory error LO97 Refer to the situation...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or net realizable value LO91 Tatum...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.12ECh. 9 - Retail inventory method; average cost LO93 San...Ch. 9 - Prob. 9.14ECh. 9 - Retail inventory method; LIFO LO93 Crosby Company...Ch. 9 - Prob. 9.16ECh. 9 - Conventional retail method; employee discounts ...Ch. 9 - Retail inventory method; solving for unknowns ...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Prob. 9.20ECh. 9 - Dollar-value LIFO retail LO95 Lance-Hefner...Ch. 9 - Prob. 9.22ECh. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Prob. 9.24ECh. 9 - Error correction; inventory error LO97 During...Ch. 9 - Prob. 9.26ECh. 9 - Inventory error LO97 In 2018, the internal...Ch. 9 - Inventory errors LO97 In 2018, the controller of...Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.30ECh. 9 - Prob. 9.31ECh. 9 - Lower of cost or net realizable value LO91 Decker...Ch. 9 - Prob. 9.2PCh. 9 - Lower of cost or market LO91 Forester Company has...Ch. 9 - Prob. 9.4PCh. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Retail inventory method; conventional and LIFO ...Ch. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Dollar-value LIFO retail method LO95 [This is a...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Prob. 9.14PCh. 9 - Inventory errors LO97 You have been hired as the...Ch. 9 - Inventory errors LO97 The December 31, 2018,...Ch. 9 - Integrating problem; Chapters 8 and 9; inventory...Ch. 9 - Purchase commitments Appendix In November 2018,...Ch. 9 - Judgment Case 91 Inventoriable costs; lower of...Ch. 9 - Integrating Case 93 FIFO and lower of cost or net...Ch. 9 - Prob. 9.4BYPCh. 9 - Prob. 9.5BYPCh. 9 - Prob. 9.6BYPCh. 9 - Prob. 9.7BYPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9BYPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Ethics Case 911 Overstatement of ending inventory ...Ch. 9 - Analysis Case 912 Purchase commitments Appendix...Ch. 9 - Continuing Cases Target Case LO93, LO94, LO95...Ch. 9 - Prob. 1CCIFRS
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