Problem 9–7
Requirement 1
Employee discounts must be deducted in the retail column.
Cost Retail
Beginning inventory $ 100,000 $ 150,000
Less:
Sales:
Sales to customers $1,750,000
Problem 9–7 (concluded)
Requirement 2
Cost Retail
Beginning inventory $ 100 ,000 $ 150 ,000
Plus: Purchases 1,387,500 2,000,000
Freight-in 10,000
Less:
Estimated ending inventory at cost:
Retail Cost
Beginning inventory $150,000 $100,000
Problem 9–8
Requirement 1
Cost Retail
Beginning inventory $ 20,000 $ 30,000
Plus: Purchases 100,151 146,495
Estimated ending inventory at cost (70% × $34,900) $ 24 ,430
Requirement 2
The difference between the inventory estimate per retail method and the
amount per physical count may be due to:
1. Theft losses.
2. Spoilage or breakage above normal.
Problem 9–9
($ in 000s) Cost Retail
Beginning inventory $ 80 $ 125
Purchases 671 1,006
Cost-to-retail percentages:
Note that the lower of average cost and net realizable value cost-to-retail
percentage is approximated by excluding net markdowns.
Problem 9–10
($ in 000s)
Cost Retail
Beginning inventory $ 80 $ 125
Plus: Net purchases 671 1,006
___________________________________________________________________________
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
$209
Total ending inventory at dollar-value LIFO retail cost …………………. $130
Problem 9–11
Employee discounts must be deducted in the retail column.
2018:
Cost Retail
Beginning inventory $ 28 ,000 $ 40 ,000
Plus: Net purchases 85,000 108,000
$ 87,000
Less: Net sales ($100,000 + 2,400)
(102,400)
___________________________________________________________________________
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
$53,000
Problem 9–11 (concluded)
2019:
$4,000
= $5,000 – 4,000 = $1,000 = Employee discounts
.80
Cost Retail
Beginning inventory $ 35 ,950 $ 53 ,000
Plus: Net purchases 90,000 114,000
___________________________________________________________________________
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
$63,800
$63,800 = $58,000 $40,000 (base)x 1.00 × 70% = $28,000
(above) 1.10 10,000 (2018)
Problem 9–12
Requirement 1
Conventional retail method, December 31, 2016
Cost Retail
Beginning inventory $ 27,500 $ 45,000
Plus: Purchases 282,000 490,000
Less:
Problem 9–12 (continued)
Requirement 2
LIFO retail method, December 31, 2016
Cost Retail
Beginning inventory $ 27 ,500 $ 45 ,000
Plus: Purchases 282,000 490,000
Less:
Retail Cost
Beginning inventory $45,000 $27,500
Problem 9–12 (concluded)
Requirement 3
Dollar-value LIFO retail method, December 31, 2017 and 2018
2017
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
$56,100
$56,100 = $55,000 $50,000 (base)^
^ The $50,000 base comes from the 2016 ending inventory at retail (see Requirement 2)
2018
1.05
Problem 9–13
Requirement 1
Dollar-value LIFO retail method
Employee discounts must be deducted in the retail column.
2018:
$14,000
Cost Retail
Beginning inventory $ 90 ,000 $150 ,000
Plus: Purchases 478,000 730,000
$90,000
Base layer cost-to-retail percentage: = 60%
$150,000
Less:
Normal spoilage (5,000)