Question

On January 1, 2021, the Coldstone Corporation adopted the dollar-value LIFO retail inventory method. Beginning inventory at cost and at retail were $200,000 and $282,450, respectively. Net purchases during the year at cost and at retail were $693,600 and $856,000, respectively. Markups during the year were $11,000. There were no markdowns. Net sales for 2021 were $846,000. The retail price index at the end of 2021 was 1.05. What is the inventory balance that Coldstone would report in its 12/31/2021 balance sheet

Answer 1

Inventory  value of Cold stone Corporation as on 31/12/2021 is $ 58,600 at cost value and $61,530 at retail value

Explanation:

In the United Kingdom, Retail price index is a measure of inflation published monthly by the Office for National Statistics. It measures the change in the cost of a representative sample of retail goods and services.

LIFO - last in first out method .,means the inventory purchased in last will be sold first.

opening inventory and closing inventory always calculated at cost price only

Cost of sales = sales- markup  

= $846,000 - $11,000  = $835,000

Closing inventory value

=  cost of sales - purchases - opening inventory

= $835,000 - $693,600  = $141,400 - $200,000 =$ 58,600

$= 835,000 - 693,600 = 141,400 - 200,000 = 58,600$

Retail value of inventory on 31/12/2021

= $ 58,600×1.05= $61,530

$= 58,600×1.05= 61,530$