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Expert-verified Found in: Page 482 ### Intermediate Accounting (Kieso)

Book edition 16th
Author(s) Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Pages 1552 pages
ISBN 9781118743201

# Question:Amiras Corporation began operations on January 1, 2017, with a beginning inventory of $30,100 at cost and$50,000 at retail. The following information relates to 2017. Retail Net purchases ($108,500 at cost)$150,000 Net markups 10,000 Net markdowns 5,000 Sales revenue 126,900 Instructions (a) Assume Amiras decided to adopt the conventional retail method. Compute the ending inventory to be reported in the balance sheet. (b) Assume instead that Amiras decides to adopt the dollar-value LIFO retail method. The appropriate price indexes are 100 at January 1 and 110 at December 31. Compute the ending inventory to be reported in the balance sheet. (c) On the basis of the information in part (b), compute cost of goods sold.

(a) Ending inventory equals $51,546. (b) Ending inventory equals$51,737.

Ending inventory to be reported in the balance sheet equals $51,546. ## Step 2: Calculation of ending inventory per dollar-value LIFO retail method Ending inventory is calculated as follows:  Cost Retail Beginning inventory$30,100 $50,000 Purchases 108,500 150,000 Net markups 10,000 Net markdowns 5,000 Total (excluding beginning inventory) 108,500 155,000 Total (including beginning inventory) 138,600 205,000 Less: Sales 126,900 Ending inventory at retail$78,100 Cost-to-retail percentage (108500/155000) 70% Cost-to-retail percentage beginning inventory (30,100/50,000) 60.20%
 Ending inventory at retail Layers at retail prices Price Index Cost-to-retail percentage Ending inventory at LIFO cost $78,100$50,000 x 100 x 60.20% = $30,100 28,100 x 110% x 70% = 21,637$78,100 $51,737 Ending inventory to be reported equals$51,737.

## Step 3: Calculation of cost of goods sold

(c) Cost of goods sold is calculated as follows: Thus, the cost of goods sold equals \$86,863. ### Want to see more solutions like these? 