ACCOUNTING
Landmark Book Store uses the conventional retail method.
Instructions
Given the following data, prepare a neat, labeled schedule showing the computation of the cost of inventory on hand at 12/31/10.
Cost Retail
Inventory 1/1/10 $ 28,900 $ 40,000
Purchases 353,600 610,000
Purchases Returns 9,000 20,000
Purchase Discounts 7,000
Sales (Gross) 615,000
Sales Returns 20,000
Employee Discounts 5,000
Freight-in 23,500
Freight-out 50,000
Loss from Breakage 2,500
Markups 38,000
Markup Cancellations 18,000
Markdowns 13,500
Markdown Cancellations 8,500
B. Landmark Book Store has decided to switch to the LIFO retail method for the period beginning 1/1/11.
Instructions
Prepare a schedule showing the computation of the 12/31/11 inventory under the LIFO retail method adjusted for price level changes (i.e., dollar-value LIFO Retail.) Without prejudice to your answer in requirement A above, assume that the 12/31/10 inventory computed under the LIFO Retail method was $40,000 and $27,500 at retail and cost, respectively, for purposes of this requirement. Data for 2011 follows:
Cost Retail
Purchases (net) $375,000 $485,000
Sales (net) 420,000
Markups (net) 30,000
Markdowns (net) 15,000
2010 Price Index 100
2011 Price Index 120
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