SIMULATION 4

Chapter 9

Develop a response in either Word or Excel and follow the instructions outlined in the Assignments Menu for submission.

A. Under your guidance, as of January 1, 2012, the Little Corner Sporting Goods Store installed the retail method of accounting for its merchandise inventory.

When you undertook the preparation of the stores financial statements at June 30, 2012, the following data were available:

	At Cost	At Retail
Inventory, January 1	$26,900	$40,000
Net Markdowns		4,000
Net Markups		15,000
Net Purchases	84,700	110,000
Net Sales		116,000

REQUIRED:

Prepare a schedule to compute the June 30, 2012 inventory under the dollar-value LIFO method, assuming a general price level increase from 100 at January 1, 2012 to 105 at June 30, 2012.

B. The Doll Company estimates the cost of its physical inventory at March 31, 2012 for use in an interim financial statement. The rate of markup on sales is 20%. The following account balances are available:

Inventory March 1, 2012	$160,000
Purchases during March	86,000
Purchase returns	4,000
Sales during March	140,000

REQUIRED

Estimate the cost of inventory at March 31.