Question: Raleigh Department Store converted from the conventional retail

Raleigh Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2009, and is now considering converting to the dollar-value LIFO retail inventory method. Management requested, during your examination of the financial statements for the year ended December 31, 2011, that you furnish a summary showing certain computations of inventory costs for the past three years. Available information follows:

a. The inventory at January 1, 2009, had a retail value of $45,000 and a cost of $27,500 based on the conventional retail method.
b. Transactions during 2009 were as follows:

Sales to employees are recorded net of discounts.
c. The retail value of the December 31, 2010, inventory was $56,100, the cost-to-retail percentage for 2010 under the LIFO retail method was 62%, and the appropriate price index was 102% of the January 1, 2010, price level.
d. The retail value of the December 31, 2011, inventory was $48,300, the cost-to-retail percentage for 2011 under the LIFO retail method was 61%, and the appropriate price index was 105% of the January 1, 2010, price level.

Required:
1. Prepare a schedule showing the computation of the cost of inventory at December 31, 2009, based on the conventional retail method.
2. Prepare a similar schedule as in requirement 1 based on the LIFO retail method.
3. Same requirement as (1) for December 31, 2010 and 2011, based on the dollar-value LIFO retail method.


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  • CreatedJuly 02, 2013
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