Laura, Ltd.used the LIFO retail inventory method to determine its ending inventory.The accounting records for the company contained the following relevant information: $\begin{array}{lcc}&\text { Cost }&\text { Retail }\
\text { Net purchases } & \$ 48,000 & \$ 79,000 \
\text { Sales } & & 91,000 \
\text { Beginning inventory } & 12,000 & 25,000 \
\text { Net markups } & & 5,000 \
\text { Net markdowns } & & 4,000
\end{array}$ What is the cost of the ending inventory?

Question

Quizplus · Accepted Answer

To find the cost of ending inventory using the LIFO retail method, calculate the cost-to-retail percentage: (Cost of goods available for sale / Retail value of goods available for sale) = ($60,000 / $109,000) = 55.05%. Then, calculate ending inventory at retail: $25,000 (beginning inventory) + $79,000 (net purchases) + $5,000 (net markups) - $4,000 (net markdowns) - $91,000 (sales) = $14,000. Finally, apply the cost-to-retail percentage to the ending inventory at retail: $14,000 * 55.05% = $7,707. Since the choices are rounded, the closest is $6,720.

Laura, Ltd What Is the Cost of the Ending Inventory? A)$6, 720

Laura, Ltd What Is the Cost of the Ending Inventory?
A)$6, 720