E9-12B (Retail Inventory Method—Conventional and LIFO) Davis Company began operations on January 1, 2006
E9-12B (Retail Inventory Method—Conventional and LIFO)
E9-12B (Retail Inventory Method—Conventional and LIFO) Davis Company began operations on January 1, 2006, adopting the conventional retail inventory system. None of its merchandise was marked down in 2006 and because there was no beginning inventory, its ending inventory for 2006 of $21,000 would have been the same under either the conventional retail system or the LIFO retail system. SOLUTION
On December 31, 2007, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2007, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.
Cost
|
Retail
| |
Inventory, Jan. 1, 2007
|
$21,000
|
$30,000
|
Markdowns (net)
|
15,000
| |
Markups (net)
|
20,000
| |
Purchases (net)
|
111,000
|
190,000
|
Sales (net)
|
175,000
|
Instructions
Determine the cost of the 2007 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method.
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