Purpose: This exercise illustrates two variations of the retail inventory method.
|
Sales
|
$ 79,000
|
|
Sales returns
|
1,000
|
|
Markups
|
10,000
|
|
Markup cancellations
|
1,500
|
|
Markdowns
|
9,300
|
|
Markdown cancellations
|
2,800
|
|
Freight on purchases
|
2,400
|
|
Purchases (at cost)
|
48,000
|
|
Purchases (at sales price)
|
88,000
|
|
Purchase returns (at cost)
|
2,000
|
|
Purchase returns (at sales price)
|
3,000
|
|
Beginning inventory (at cost)
|
30,000
|
|
Beginning inventory (at sales price)
|
46,500
|
It will provide an opportunity to compare and contrast these two approaches. The records of Nancy Klintworth's Baubles report the following data for the month of May.
Instructions
(a) Compute the ending inventory by the conventional retail inventory method.
(b) Compute the ending inventory using the retail method to approximate a LIFO cost figure (assuming stable prices).