INTERMEDIATE ACCT VOL.2>CUSTOM<
9th Edition
ISBN: 9781307165067
Author: SPICELAND
Publisher: MCG/CREATE
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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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Students have asked these similar questions
P6.11 (LO 6), AP Rayre Books uses the retail inventory method to estimate its monthly ending invento-
ries. The following information is available for two of its departments at October 31, 2022.
Hardcovers Paperbacks
Cost Retail Cost Retail
Beginning inventory $ 420,000 $ 640,000 $ 280,000 $ 360,000
Purchases 2,135,000 3,200,000 1,155,000 1,540,000
Freight-in 24,000 12,000
Purchase discounts 44,000 22,000
Net sales 3,100,000 1,570,000
At December 31, Rayre Books takes a physical inventory at retail. The actual retail values of the inven-
tories in each department are Hardcovers $744,000 and Paperbacks $335,000.
Instructions
a. Determine the estimated cost ofthe ending inventory for each department at October 31, 2022,
using the retail inventory method.
b. Compute the ending inventory at cost for each department atDecember 31, assuming the cost-to-
retail ratios for the year are 65% for Hardcovers and 75% for Paperbacks.
E9.23
(LO 6 ) (Analysis of Inventories) The financial statements of ConAgra Foods, Inc.'s 2017 annual report disclose the following information.
(in millions)
2017
2016
2015
Year-end inventories
$934.2
$1,044.1
$1,642.6
Fiscal Year
2017
2016
Net sales
$7,826.9
$8,664.1
Cost of goods sold
5,484.8
6,234.9
Net income
648.0
(665.9)
Instructions
Compute ConAgra's (a) inventory turnover and (b) the average days to sell inventory for 2017 and 2016.
E8.8 (LO 2) (Purchases Recorded, Gross Method) Cruise Industries purchased $10,800 of merchandise on February 1, 2020, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $2,500 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13.
Instructions
a. Assuming that Cruise uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method.
b. Assuming that Cruise uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method.
c. At what amount would the purchase on February 1 be recorded if the net method were used?
Chapter 9 Solutions
INTERMEDIATE ACCT VOL.2>CUSTOM<
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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