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Homework answers / question archive / Londinium Corp

Londinium Corp

Accounting

Londinium Corp. values its inventory by using the 
retail method (FIFO basis, following information ended: lower of cost or NRV). The is available for the year just Cost Retail Beginning inventory P 80,000 P140,000 Purchases 297,000 420,000 Freight-in 4,000 ? Breakage 8,000 Markups (net) 10,000 Markdowns (net) 2,000 Sales 400,000 
At what amount would Londinium report its ending inventory? a. P112,000 c. P117,600 b. P113,400 d. P119,000 AICPA 1179 11-9 
 

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Answer

a .

Explanation

Computation of Amount of Ending Inventory:

  Cost Retail
Purchases 297,000 420,000
Freight-in 4000  
Markups, net   10,000
Adjusted purchases 301,000 430,000
Beginning inventory 80,000 140,000
Goods available 381,000 570,000
Net markdowns   -2000
Shortages   -8,000
Sales   -400,000
Ending inventory -- retail   160,000
Cost-retail ratio ($301,000 / $430,000)   0.7
Ending inventory   112000

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