Exercise 9–15
Cost Retail
Beginning inventory $160 ,000 $ 280 ,000
Plus: Net purchases 607,760 840,000
Estimated ending inventory at cost:
Retail Cost
Exercise 9–16
Cost Retail
Beginning inventory $ 12,000 $ 20,000
Exercise 9–17
Requirement 1
Cost Retail
Beginning inventory $ 40,000 $ 60,000
Estimated ending inventory at cost (56% × $168,500) (94 ,360)
Estimated cost of goods sold $163 ,128
Requirement 2
Net markdowns are included in the cost-to-retail percentage:
Exercise 9–18
Net purchases:
Using LIFO, the beginning inventory is excluded from the calculation of the
cost-to-retail percentage:
Cost of goods available (excluding beg. inventory)
Cost-to-retail percentage =
Goods available at retail (excluding beg. inventory)
x
Net purchases at retail equals $21,000 less markups plus markdowns.
Net sales:
The cost-to-retail percentage can be calculated as follows:
Cost Retail
Beginning inventory $21,000.00 $ 35,000
Less: Net sales ( ? )
Estimated ending inventory at retail ?
Estimated ending inventory at retail is:
$17,437.50
Exercise 9–19
Cost Retail
Beginning inventory $ 71 ,280 $132 ,000
___________________________________________________________________________
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-End at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
Exercise 9–20
Requirement 1
Requirement 2
2018
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-End at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
$25,000
Total ending inventory at dollar-value LIFO retail cost …………. $16 ,281
2019
$28,600
Exercise 9–21
Cost Retail
Beginning inventory $160 ,000 $250 ,000
___________________________________________________________________________
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-End at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
$385,000
Exercise 9–22
Cost-to-retail percentage, 1/1/2018:
Cost-to-retail percentage, 12/31/2018:
$33,600
= $30,000 = Ending inventory at base year retail
1.12
Exercise 9–22 (concluded)
2019 ending inventory:
Cost Retail
Beginning inventory $22 ,792 $ 33 ,600
___________________________________________________________________________
Step 1 Step 2 Step 3
Ending Ending Inventory Inventory
Inventory Inventory Layers Layers
at Year-End at Base Year at Base Year Converted to
Retail Prices Retail Prices Retail Prices Cost
$42,000
$42,000 = $35,000 $28,000 (base)
x 1.00 × 75.00%
= $21,000
Exercise 9–23
Requirement 1
To record the change: ($ in
millions)
Requirement 2
CPS applies the average cost method retrospectively; that is, to all prior
Then, the cumulative effects of the new method on periods prior to those
presented are reflected in the reported balances of the assets and liabilities affected
The effect of the change on each line item affected should be disclosed for
each period reported as well as any adjustment for periods prior to those reported.