For the wholesale division, Devin uses the dollar value LIFO method of inventory. The base year established for LIFO is 2014. The inventory at the end of 2014 was calculated as $1,040,500. For the next 3 years you have the following information: 2015 2016 2017 Ending inventory counted at cost 1,085,000 1,091,000 1,398,000 Price level increase from 2014 3% 5% 10% Net Purchases $2,935,000 Net Sales $5,456,000 Required for the retail division: 1. Calculate the ending inventory to be reported on the balance sheet for each of the three years. 2. Calculate the cost of goods sold and the gross margin for 2016.
For the wholesale division, Devin uses the dollar value LIFO method of inventory. The base year established for LIFO is 2014. The inventory at the end of 2014 was calculated as $1,040,500. For the next 3 years you have the following information: 2015 2016 2017 Ending inventory counted at cost 1,085,000 1,091,000 1,398,000 Price level increase from 2014 3% 5% 10% Net Purchases $2,935,000 Net Sales $5,456,000 Required for the retail division: 1. Calculate the ending inventory to be reported on the balance sheet for each of the three years. 2. Calculate the cost of goods sold and the gross margin for 2016.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 12P: Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at...
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Transcribed Image Text:For the wholesale division, Devin uses the dollar value LIFO method of inventory. The base year established for LIFO is 2014. The inventory at the end of 2014 was calculated as $1,040,500. For the
next 3 years you have the following information:
2015
2016
2017
Ending
inventory
counted at
cost
1,085,000
1,091,000
1,398,000
Price level
increase
from 2014
3%
5%
10 %
Net
Purchases
$2,935,000
Net Sales
$5,456,000
Required for the retail division:
1. Calculate the ending inventory to be reported on the balance sheet for each of the three years.
2. Calculate the cost of goods sold and the gross margin for 2016.
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