Reference no: EM131000061
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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