Question: Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December

Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2025.

Amounts as shown below appear on the store’s books before adjustment. Inventory, January 1, 2025 Purchases in 2025 Markups in 2025 Markdowns in

You are to assume that all markups and markdowns apply to 2025 purchases, and that it is appropriate to treat the entire inventory as a single department.

InstructionsCompute the inventory at December 31, 2025, under the following methods.

a. The conventional retail method.

b. The last-in, first-out retail method, effecting the change in method as of January 1, 2025. Assume that the cost-to-retail percentage for 2024 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.

Inventory, January 1, 2025 Purchases in 2025 Markups in 2025 Markdowns in 2025 Sales revenue in 2025 Cost $ 15,800 116,200 Retail $ 24,000 184,000 12,000 5,500 175,000

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