Davies adopted the dollar-value LIFO retail inventory method on January 1, 2010.The following information for 2010 was taken from the company's records: Cost Retail Sales $ 189 , 000 Net markups 6 , 000 Inventory, January 1, 2010 $ 21 , 000 30 , 000 Purchases 147 , 000 200 , 000 Net markdowns 10.700 \begin{array}{lll} & ext { Cost } & ext { Retail }\ ext { Sales } & & \$ 189,000 \ ext { Net markups } & & 6,000 \ ext { Inventory, January 1, } 2010 & \$ 21,000 & 30,000 \ ext { Purchases } & 147,000 & 200,000 \ ext { Net markdowns } & & 10.700\end{array} Sales Net markups Inventory, January 1, 2010 Purchases Net markdowns Cost $21 , 000 147 , 000 Retail $189 , 000 6 , 000 30 , 000 200 , 000 10.700 The price index on January 1, 2010, was 100.On December 31, 2010, it was 110.Round cost/retail percentages to the nearest whole percent if necessary.Required:Compute the inventory value for December 31, 2010.

Question

Davies adopted the dollar-value LIFO retail inventory method on January 1, 2010.The following information for 2010 was taken from the company's records:  Cost   Retail   Sales  $ 189 , 000  Net markups  6 , 000  Inventory, January 1,  2010 $ 21 , 000 30 , 000  Purchases  147 , 000 200 , 000  Net markdowns  10.700 \begin{array}{lll} & 	ext { Cost } & 	ext { Retail }\	ext { Sales }  &   &  \$ 189,000 \	ext { Net markups }  & &  6,000 \	ext { Inventory, January 1, } 2010  &  \$ 21,000  &  30,000 \	ext { Purchases }  &  147,000  &  200,000 \	ext { Net markdowns }  &   &  10.700\end{array}  Sales   Net markups   Inventory, January 1,  2010  Purchases   Net markdowns  ​  Cost  $21 , 000 147 , 000 ​  Retail  $189 , 000 6 , 000 30 , 000 200 , 000 10.700 ​   The price index on January 1, 2010, was 100.On December 31, 2010, it was 110.Round cost/retail percentages to the nearest whole percent if necessary.Required:Compute the inventory value for December 31, 2010.

Sunny Patel · Accepted Answer

Final Answer :  Inventory value = $23, 475, computed as follows: Cost percentages:    Beginining inventory.  $ 21 , 000 / $ 30 , 000 = 0.70  Purchases:  $ 147 , 000 / ( $ 200 , 000 + $ 6 , 000 − $ 10 , 700 ) = 0.75  Ending inventory at retail:  $ 36 , 300  Ending inventory at base year retail:  $ 36 , 300 / 1.10 ) = $ 33 , 000 \begin{array}{ll}	ext { Beginining inventory. }  &  \$ 21,000 / \$ 30,000=0.70 \	ext { Purchases: }  &  \$ 147,000 /(\$ 200,000+\$ 6,000-\$ 10,700)=0.75 \\	ext { Ending inventory at retail: }  &  \$ 36,300 \	ext { Ending inventory at base year retail: }  &  \$ 36,300 / 1.10)=\$ 33,000\end{array}  Beginining inventory.   Purchases:   Ending inventory at retail:   Ending inventory at base year retail:  ​ $21 , 000/$30 , 000 = 0.70 $147 , 000/ ( $200 , 000 + $6 , 000 − $10 , 700 ) = 0.75 $36 , 300 $36 , 300/1.10 ) = $33 , 000 ​   Layers    Retail   Index   Cost %   Cost  $ 30 , 000 100 0.70 $ 21 , 000 3 , 000 110 0.75 2 , 475 $ 33 , 000 $ 23 , 475 \begin{array}{rlll}	ext { Retail }  &  	ext { Index }  &  	ext { Cost \% }  &  	ext { Cost } \\$ 30,000  &  100  &  0.70  &  \$ 21,000 \3,000  &  110  &  0.75  &  2,475\\$33,000 & & & \$23,475\end{array}  Retail  $30 , 000 3 , 000 $33 , 000 ​  Index  100 110 ​  Cost %  0.70 0.75 ​  Cost  $21 , 000 2 , 475 $23 , 475 ​

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