Londinium Corp

Accounting Apr 01, 2021

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

Expert Solution

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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