(Change to LIFO Retail) 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, 2012. Amounts as shown below appear on the store’s books before adjustment.
|
At Cost |
At Retail |
|
|
Inventory, January 1, 2012 |
$ 15,800 |
$ 24,000 |
|
Purchases in 2012 |
116,200 |
184,000 |
|
Markups in 2012 |
12,000 |
|
|
Markdowns in 2012 |
5,500 |
|
|
Sales in 2012 |
175,000 |
You are to assume that all markups and markdowns apply to 2012 purchases, and that it is appropriate to treat the entire inventory as a single department.
Instructions
Compute the inventory at December 31, 2012, 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, 2012. Assume that the cost to retail percentage for 2011 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.