Purpose: This exercise will illustrate the use of the dollar-value LIFO retail method when there is: (a) a decrease in inventory and (b) an increase in inventory.
You assemble the following information for Henrietta's Department Store, which computes its inventory under the dollar-value LIFO retail method.
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Cost
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Retail
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Inventory on January 1, 2014
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$227,200
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$320,000
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Purchases
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340,400
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460,000
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Purchases
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8%
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Instructions
(a) Compute the cost of the inventory on December 31, 2014, assuming that the ending inventory at retail is $286,200.
(b) Compute the cost of the inventory on December 31, 2014, assuming that the ending inventory at retail is $351,000.