Raleigh Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2014, 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, 2016, 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, 2014, had a retail value of $50,000 and a cost of $36,200 based on the conventional retail method.
b.	Transactions during 2014 were as follows:

	Cost			Retail
Gross purchases	$	333,900		$	540,000
Purchase returns		6,400			15,000
Purchase discounts		5,500
Gross sales					500,000
Sales returns					8,000
Employee discounts					5,500
Freight-in		29,000
Net markups					30,000
Net markdowns					15,000

	Sales to employees are recorded net of discounts.
c.	The retail value of the December 31, 2015, inventory was $104,325, the cost-to-retail percentage for 2015 under the LIFO retail method was 70%, and the appropriate price index was 107% of the January 1, 2015, price level.
d.	The retail value of the December 31, 2016, inventory was $53,350, the cost-to-retail percentage for 2016 under the LIFO retail method was 69%, and the appropriate price index was 110% of the January 1, 2015, price level.

Required:
1.	Prepare a schedule showing the computation of the cost of inventory at December 31, 2014, based on the conventional retail method. (Amounts to be deducted should be indicated by a minus sign.)

2.	Prepare a schedule showing the computation of the cost of inventory at December 31, 2014, based on the LIFO retail method.

3.	Calculate the cost of inventory for December 31, 2015 and 2016, based on the dollar-value LIFO retail method.

rev: 01_08_2016

References

eBook & Resources

WorksheetLearning Objective: 09-03 Estimate ending inventory and cost of goods sold using the retail inventory method, applying the various cost flow methods.Learning Objective: 09-05 Determine ending inventory using the dollar-value LIFO retail inventory method.

Difficulty: 2 MediumLearning Objective: 09-04 Explain how the retail inventory method can be made to approximate the lower of cost and net realizable value rule