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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$ 76,720 $137,000 Net purchases113,850256,000 Net markups7,000 Net markdowns10,000 Net sales229,000 Retail price index, 12/31/20211.12 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$76,720 $137,000 Plus: Net purchases113,850 256,000 Net markups7,000 Less: Net markdowns(10,000) Goods available for sale (excluding beginning inventory) 113,850 253,000 Goods available for sale (including beginning inventory) 190,570 390,000 Less: Net sales(229,000) Estimated ending inventory at current year retail prices $ 161,000 Estimated ending inventory at cost (below)(80,122) Estimated cost of goods sold$110,448 Base year Cost-to-retail percentage:$76,720 =56% $137,000 2021 Cost-to-retail percentage:$113,850 =45% $253,000

Ending Inventoryat Year-endRetailPricesStep 1Ending Inventory atBase Year RetailPricesStep 2Inventory LayersatBase Year RetailpricesStep 3 Inventor y Layers Converte d to Cost $161,000 $ 161,00 0 =$143,750$137,000(base)×1.00 ×56% =$ 76,72 0 (above)1.12 6,750 (2018)×1.12 × 45% = 3,402 Total ending inventory at dollar-value LIFO retail cost $ 80,12 2 Ending inventory at retail$161,000 Ending inventory at cost$80,122 Cost of goods sold$110,448