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Problem #3
Robin Rotelle Corp. began operations late in 2020 and adopted the conventional
retail method. Because there was no beginning inventory for 2020 and no markdowns during
2020, the ending inventory as of Dec. 31, 2020 was $525,000 using either the conventional retail
or LIFO retail methods. At the end of 2021 Robin wants to compare the results of applying
the conventional and LIFO retail methods.
The following data is available for computations:
Cost
Retail
Inventory Dec. 31, 2020
525,000
1,312,500
2021 Purchases
1,917,825
4,100,000
2021 Net markups
16,000
2021 Net markdowns
202,071
2021 Net Sales
3,690,000
2021 Price Index
108
Required: Compute the cost of the 2021 ending inventory under the
a conventional retail method
b LIFO retail method
Dollar-value Lifo Retail Method (2020 is “Base-year”)
11
02
D3