Estimating Inventory Using LIFO Retail Method

Dean Company uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating to the inventory at July 31 follow.

For Six-Months Ended July 31	Cost	Retail
Beginning inventory, January 31	$630,000	$875,000
Purchases	3,570,000	5,512,500
Markups, net		612,500
Sales		6,037,500
Markdowns, net		437,500

Required Estimate inventory at July 31 using the LIFO retail method.

First, compute current year-end inventory at retail prices: Note: Do not use negatives signs with your answers.

Total goods available for sale at retail	Answer
Less: Net sales	Answer
Estimated ending inventory at retail	Answer

Next, compute the cost ratios:

Cost Ratio	Numerator		Denominator		Result
Beginning Inventory	Answer		Answer	=
Current Year	Answer		Answer	=