Answer:
(a) Ending inventory at retail is $77,800; and Ending inventory at cost is $50,827.
(b) Ending inventory at retail is $18,200; and Ending inventory at LIFO Cost = $50,807.
Explanation:
Note: This question is not complete. The complete question is therefore presented before answering the question. See the attached pdf file for the complete question.
The explanation to the answer is therefore presented as follows:
(a) Determine the cost of the 2020 ending inventory under the conventional retail method
Note: See part (a) of the attached excel file for the calculation of cost of the 2020 ending inventory under the conventional retail method.
In the attached file, ending inventory at cost is calculated as follows:
Cost to retail ratio = Total inventory at cost / Total inventory after adjusting for markups at Retail = $167,900 / $257,000 = 0.6533, or 65.33%
Ending inventory at Cost = Cost to retail ratio * Ending inventory at Retail = 65.33% * $77,800 = $50,827
(b) Determine the cost of the 2020 ending inventory under the LIFO retail method.
Note: See part (b) of the attached excel file for the calculation of the cost of the 2020 ending inventory under the LIFO retail method.
In the attached file, incremental at cost is calculated as follows:
Cost to retail ratio = Total inventory excluding beginning inventory at cost / Total inventory excluding beginning inventory at retail = $129,900 / $184,600 = 0.7037, or 70.37%
Incremental at cost = Cost to retail ratio * Ending inventory - Retail = 70.37% * $18,200 = $12,807
