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10. The Marshall Variety Store uses the lifo retail inventory method at stable prices. The following information is available as of January 2, 2021: Cost Retail Inventory, January 2, 2021 $186,000 $270,000 Purchases 560,000 700,000 Sales 760,000 Net Markups 160,000 Net Markdowns 60,000 What was the inventory value as of December 31, 2021 using the lifo-retail inventory method

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Answer:

$310,000

Explanation:

Beginning inventory:       $186,000 (cost); $ 270,000 (retail);

                                         $186,000 : $270,000 cost to retail ⇒ 1.45

Purchases:                        $560,000 (cost); $700,000 (retail);

                                         $560,000 : $700,000 cost to retail ⇒ 1.25

Net markups:                   $n/a (cost); $160,000 (retail);

Net markdowns:              $ n/a (cost); $60,000 (retail);

Sales:                                $ n/a (cost); $760,000 (retail).

                                 

the cost of goods sold (COGS) using LIFO = ($700,000 / 1.25) + ($60 / 1.4516) = $560,000 + $41,333.33 = $601,333.33

ending inventory = [($186,000 - $41,333.33) x 1.4516] + $160,000 - $60,000 = $210,000 + $160,000 - $60,000 = $310,000

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