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School: American Public University - Course: ACCT 302 - Subject: Accounting

On January 1, 2021, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2021: CostRetail Beginning inventory$ 84,560 $151,000 Net purchases127,000260,000 Net markups9,000 Net markdowns15,000 Net sales237,000 Retail price index, 12/31/20211.05 Required: Calculate the estimated ending inventory and cost of goods sold for 2021 using the information provided.(Do not round intermediate calculations.) Explanation CostRetail Beginning inventory$84,560 $151,000 Plus: Net purchases127,000 260,000 Net markups9,000 Less: Net markdowns(15,000) Goods available for sale (excluding beginning inventory) 127,000 254,000 Goods available for sale (including beginning inventory) 211,560 405,000 Less: Net sales(237,000) Estimated ending inventory at current year retail prices $ 168,000 Estimated ending inventory at cost (below)(89,285) Estimated cost of goods sold$122,275 Base year Cost-to-retail percentage:$84,560 =56% $151,000 2021 Cost-to-retail percentage:$127,000 =50% $254,000

Ending Inventoryat Year-endRetailPricesStep 1Ending Inventory atBase Year RetailPricesStep 2Inventory LayersatBase Year RetailpricesStep 3 Inventor y Layers Converte d to Cost $168,000 $ 168,00 0 =$160,000$151,000(base) ×1.00 ×56% =$ 84,56 0 (above)1.05 9,000(2018)×1.05 × 50% = 4,725 Total ending inventory at dollar-value LIFO retail cost $ 89,28 5