On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows: 2021 2022 Cost Retail Cost Retail Beginning inventory $ 147,000 $ 210,000 Purchases 498,000 678,000 $ 650,000 $ 904,000 Purchase returns 4,500 4,500 3,400 2,000 Freight-in 6,000 5,000 Net markups 5,950 10,200 Net markdowns 4,450 7,200 Net sales to customers 458,000 706,000 Sales to employees (net of 30% discount) 17,500 17,500 Normal spoilage 5,800 6,100 Price Index: January 1, 2021 1.00 December 31, 2021 1.12 December 31, 2022 1.25 1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method. 2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method. 3. Estimate the 2021 ending inventory and cost of goods sold using the conventional retail method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows:

	2021		2022
	Cost	Retail		Cost	Retail
Beginning inventory	$	147,000		$	210,000
Purchases		498,000			678,000	$	650,000	$	904,000
Purchase returns		4,500			4,500		3,400		2,000
Freight-in		6,000					5,000
Net markups					5,950				10,200
Net markdowns					4,450				7,200
Net sales to customers					458,000				706,000
Sales to employees (net of 30% discount)					17,500				17,500
Normal spoilage					5,800				6,100
Price Index:
January 1, 2021		1.00
December 31, 2021		1.12
December 31, 2022		1.25

1. Estimate the 2021 and 2022 ending inventory and cost of goods sold using the dollar-value LIFO retail method.
2. Estimate the 2021 ending inventory and cost of goods sold using the average cost retail method.

3. Estimate the 2021 ending inventory and cost of goods sold using the conventional retail method.

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