1.
Dollar-Value-LIFO: This method shows all the inventory figures at dollar price rather than units. Under this inventory method, the units that are purchased last, are sold first. Thus, it starts from the selling of the units recently purchased and ending with the beginning inventory.
To Determine: the cost-to-retail percentage for the inventory on hand at 1/1/2018.
1.
Explanation of Solution
Determine the cost-to-retail percentage for the inventory on hand at 1/1/2018.
Therefore, the cost-to-retail percentage for the inventory on hand at 1/1/2018 is 80%.
2.
To Calculate: the inventory value at the end of 2018 and 2019 using the dollar-value LIFO retail method.
2.
Explanation of Solution
Calculate the inventory value at the end of 2018 and 2019 using the dollar-value LIFO retail method.
Ending inventory at dollar-value LIFO retail cost (2018) | ||||
Step 1 | Step 2 | Step 3 | ||
Ending inventory at year-end retail prices ($) | Ending inventory at base year retail prices ($) | Inventory layers at base year retail prices ($) | Inventory layers converted to cost ($) | |
25,000 | 20,000 (1) | 18,750 (Base)(5) | 15,000 (8) | |
1,250 (2018)(7) | 1,281(10) | |||
Total ending inventory at dollar-value LIFO retail cost | $16,281 |
Table (1)
Ending inventory at dollar-value LIFO retail cost (2019) | ||||
Step 1 | Step 2 | Step 3 | ||
Ending inventory at year-end retail prices ($) | Ending inventory at base year retail prices ($) | Inventory layers at base year retail prices ($) | Inventory layers converted to cost ($) | |
28,600 | 22,000 (2) | 18,750 (Base)(3) | 15,000 (6) | |
1,250 (2018)(4) | 1,281(7) | |||
2,000 (2019) (5) | 2,210 (8) | |||
Total ending inventory at dollar-value LIFO retail cost | $18,491 |
Table (2)
Working notes:
Calculate the amount of ending inventory at base year retail prices.
Calculate the amount of inventory layers at base year retail prices.
Calculate the amount of inventory layers at current year retail prices.
Calculate the amount of inventory layers at current year retail prices.
Calculate the amount of inventory layers converted to cost (Base).
Calculate the amount of inventory layers converted to cost (2018).
Calculate the amount of inventory layers converted to cost (2019).
Therefore, the inventory value at the end of 2018 and 2019 using the dollar-value LIFO retail method are $16,281 and $18,491.
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Chapter 9 Solutions
GEN COMBO INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
- Exhibit7.5 Sullivan Produce Co. switched from FIFO to LIFO on January1,2018, for external reporting and income tax purposes, while retaining FIFO for internal reports. On that date, the FIFO inventory equaled $360,000. The ensuing three-year period resulted in the following: December31,2018 Year-End Costs $438,000 Cost Index 1.05 December 31,2019 Year-End Costs $460,000 Cost Index 1.15 December 31, 2020 Year-End Costs $520,000 Cost Index 1.25 Refer to Exhibit 7-5, The ending inventory at December 31,2020, using the dollar-value LIFO method would be a. $422,000 b. $402,000 c $426,000 d. $420,400 Refer to Exhibit7-5, the ending inventory at December 31,2019, at base-year price is: a.$400,000 b. $402,000 c.$406,000 d.$424,000arrow_forwardMF2 9 Purchased merchandise from Keene Co. for $9,100 under credit terms of 2/15, n/60, FOB destination. Analysis Component: As the senior purchaser for Belton Company, you are concerned that the purchase discounts you have negotiated are not being taken advantage of by the accounts payable department. Calculate the cost of the lost discount regarding the July 9 purchase. Assume a 6% interest rate. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume 365 days a year.)arrow_forwardHW Q 4 Current Attempt in Progress At the end of Bridgeport Department Store’s fiscal year on November 30, 2020, these accounts appeared in its adjusted trial balance. Freight-In $ 7,500 Inventory 39,400 Purchases 578,500 Purchase Discounts 6,600 Purchase Returns and Allowances 2,900 Sales Revenue 1,044,700 Sales Returns and Allowances 17,000 Additional facts: 1. Merchandise inventory on November 30, 2020, is $ 53,800. 2. Bridgeport Department Store uses a periodic system. Prepare an income statement through gross profit for the year ended November 30, 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) BRIDGEPORT DEPARTMENT STOREIncome Statement (Partial)choose the accounting period select an opening name for section one enter an income statement item $ enter a dollar amount…arrow_forward
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- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning